Category: Routes for Sale Blog

Securing Financing for Route Business Purchase

Securing financing for a route business purchase can be extremely difficult.  Most conventional lenders cannot issue loans for routes due to the nature of the business.  The only collateral for the lender would be the route itself.  If the loan holder defaulted on the loan then the lender would have to manage the route until they found a suitable buyer.

There are really only a couple of options for securing financing on a route purchase…

1. Many companies offer financing through their own banking partner.  Pepperidge Farm, Bimbo and other large manufacturers stand behind the value of their routes with their bank partner.  This allows the bank to issue financing because they know that the company will maintain the route if the loan defaults.  The company would continue running the route until they sell it and pay the bank back for the loan.
2. Another possibility would be to go through a company that specializes in startup/small business financing.  These loans are approved based solely on personal credit history.  The loans are often referred to as unsecured business finance and come in the form of business credit cards which cash can be drawn from.  We have specialists that can provide a no cost pre-approval process.  Contact us here for more info.

Unfortunately securing financing for route purchases is very difficult.  There are limited options unless the company itself is providing financing through their bank.  We do have funding specialists that can provide free advice to anyone who needs outside financing.  If you are interested please contact us at any time and we will have a specialist reach out.  Thank you.

How to Determine Fair Value for a Route Business

Over the last several years we have sold a variety of route businesses.  The types of routes sold include vending routes, landscaping routes, bread routes, snack routes, wholesale supply routes, pool routes and several others.  One of the most common questions we receive from our sellers is how to determine a fair asking price for their route business.

We have listed some guidelines for pricing a variety of businesses below.  There are a number of variables that can impact a business’ price.  Each business is unique and may not fit into the “typical” pricing structure.  The outline below should be treated as a rough guide or estimate.

Vending Routes

Vending routes are often priced and sold based strictly on their gross annual sales volume.  Most vending routes operate with a 40-50% profit margin.  If the business sells for one times its annual gross sales, that typically allows the buyer to earn back their investment in about two years.  Of course other factors such as the number of accounts, flexibility of schedule, quality of machines, etc. can play a large role in the value as well.

Bread Routes

Bread routes are typically sold based on their average weekly sales volume and a local, market based multiplier.  For example, a Pepperidge Farm route doing $10,000 in weekly sales might sell at a multiplier of 15 times if it is located in Omaha, NE.  That same route, with the same $10,000 weekly sales volume, might sell for a 25 times multiplier if it is located in New York City, NY.

Each company and market will use different multipliers based on historical sales of similar routes in the area.  Larger routes typically sell for a slightly higher multiplier since they generate more income.  Routes that are more attractive…possibly with a more flexible schedule, lower number of accounts, better company financing…will typically have higher multipliers as well.

Snack/Cookie Routes

Snack, cookie or pastry routes are generally priced the same way as bread routes

Landscaping Routes

Landscaping routes are very unique since they often include a more significant amount of equipment.  A number of other factors come into play that may not be considered for bread, snack, vending or other routes.  For example, are the accounts under contract?  If so, what services are under contract and what amount of revenue is “guaranteed” with service agreements.  Small local routes will typically have an earn back period of less than one year.  Larger routes, those with 3+ employees and significant equipment included, may have earn back periods closer to 2-3 years.

If you have any questions about how to price your route or the best way to find a serious buyer, please contact us today.  You can always find our full list of routes for sale at this page as well.  Thank you!