What is owning a snack distributorship like?

As an independent owner/operator, a route distributor has the right to service certain registered accounts with all the products made available by the company. There are opportunities to build sales within the original registered accounts, as well as developing new registered accounts following the Distributor Agreement. The distributor controls the days he or she will work, hours of operation, and with the exception of established chain accounts – the price charged to the accounts. Distributors may call on chain accounts every day of the week, or several days each week, and might be required to provide “pack-out service” on Sundays. Distributors may call on non-chain accounts once or more per week. Frequent service is an integral part of our business, and the reason for our success.

Do I purchase an assigned territory?

Distributors have the ability to service accounts through our service area. When you purchase a route, you are not purchasing an assigned territory, but registered accounts. These accounts are protected to you, the registered distributor, as long as you provide good service. Distributors follow the procedures in the Distributor Guideline to solicit and register new and additional non-chain accounts. Chain accounts are assigned by the company, as they become available.  

What profit might I expect?

Overall profit is determined by several factors, including the size of the route, weekly sales volume, the prices charged and weekly expenses. Distributors servicing chain accounts typically receive __% profit on sales; distributors servicing non-chain accounts typically receive __% -__% profit. Distributors set their own pricing for non-chain accounts, but must consider competitors’ prices in the market. Expenses may include the following: truck insurance, business liability insurance, gas, warehouse rent and fees, parking fees/tolls, hand-held computer fees, taxes, helper salaries, etc. 

How are routes valued?

Routes are often sold at a ratio of weekly sales, averaged over a 52-week period to account for seasonal fluctuations in volume. The company makes no attempt to value routes. The purchase price is often set by multiplying the weekly dollar volume by a multiple that is negotiated between the buyer and seller. Many factors influence the selling price of a route, including: recent route sale prices, the size and geography of the route, condition and age of the truck (if included), presence of competitors in the accounts, relationships with store owners and managers, etc.

Must I purchase my own truck?

Many route sales include the truck currently used by the seller, often included in the overall purchase price. However, all distributors are responsible for the purchase, maintenance and insurance for their own vehicle.

What warehousing is available?

Several warehouses are available throughout our service area. Buyers may be required to take over leases for warehouse space from the selling distributor. There are five “central” warehouses which are privately owned and operated. Distributors working out of these locations pay the warehouse directly each week for the product they purchase, as well as rent, service and parking fees. Distributors in central warehouses have the ability to access product on a daily basis: after contacting the warehouse with their order, their order is pulled and staged for them to pick up.

There are also a number of “independent” warehouse locations, where distributors lease their own space and pay rent, utilities and unloader fees. These distributors order and receive product deliveries once per week and store their product in their own bin. They will pay the company directly for product purchased each week through an EFT agreement. 

How do I become a distributor?

You become a distributor by purchasing an existing distributorship from a current owner/operator. Many sellers will advertise their businesses for sale in local newspaper classified ads, or online. Some will list their business with a route broker, and others will request that the company refer calls and inquiries directly to them. We as a company do not act as brokers, but can refer interested buyers directly to motivated sellers.

Do I sign a contract with the company?

All new distributors will sign a Distributor Agreement at closing which stipulates the details of our business relationship. The new distributor will also sign an Equipment Agreement for the hand-held computer and printer, and an Electronic Funds Transfer (EFT) Agreement, which designates a bank account for us to make direct payments and withdrawals. 

May I operate more than one truck?

All route owners in our business are owner/operators: each distributor must be the one operating his truck and servicing his accounts each week. There are unlimited opportunities to build sales, and therefore equity, in this business. When a distributor reaches the point where he has too much business to conduct each week out of one truck, he can “sell-off” business, which allows the distributor to reclaim equity while freeing his time to pursue more frequent service to his remaining accounts as well as build new business. There are three ways to “sell-off” business: selling off a large piece of business to form a new route; joining with another distributor to each sell off a piece of business that will form a new combined route; and selling off a smaller piece of business to a smaller existing route.  

What is the first step in purchasing a route?

If after contacting a distributor, a potential purchaser has an interest in a particular snack route, he or she will make arrangements to meet the seller and go out on the route to determine whether this particular opportunity is a good fit in terms of geography, sales volume and needed profit. The more time spent on the route will allow the buyer to make an informed decision.

What is the next step?

If, after performing all due diligence, the buyer decides to purchase the route, a contract is drawn up and signed by both parties. The company maintains a right to approve all potential buyers, and will have the buyer complete a distributor application and an interview. Qualified candidates will have valid driver’s licenses and be able to secure insurance liability coverage for their business. Investigations into driver’s license, criminal and credit history will be completed. If approved, the company arranges a closing date with the buyer and seller to complete the purchase of the business.

Is training available?

All new distributors receive a business orientation and hand-held computer training prior to purchasing the business. Experienced former route owner/operators have been hired by the company to provide a two-week, on-truck training to insure that all new distributors are fully capable to meet the demands of the business.

What technology support is available?

All distributors are trained to use hand-held computers in servicing their accounts. Distributors are responsible to pay a weekly usage fee for this equipment and service. The fee includes insurance and support, including a loaner and replacement program. Weekly distributor statements detail all business transactions, and electronic fund transfers (EFT) complete deposits or withdrawals into specified accounts. Marketing and promotional information is e-mailed on a weekly basis.

Must I incorporate my business?

No. The company will work with independent owner operators who choose to incorporate their business, as well as those who choose to operate as a sole proprietor. The decision on whether to incorporate should be made after consulting with your accountant and attorney. Only spouses may be included as officers in the corporation, and the corporation must be formed exclusively for the snack route.

Is financing available?

The company does not provide financing, but the seller may agree to finance note payments as part of the negotiation process. The buyer is responsible for financing the purchase of the route, and if necessary, may seek loans from banks or the SBA (Small Business Association). 

What closing costs or fees are associated with purchasing a route?

There are no closing costs or fees for buyer or seller. All parties are responsible for having their attorneys present at the closing, and sellers will, under their distributor agreement, pay a nominal training fee to the company to provide training for their buyer. Sellers must pay all business related debts prior to closing, and post a $2000.00 escrow to be held for 90 days. In certain cases, a buyer may be required to pre-pay their first merchandise order, which will be credited on their first statement.

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