Some operators recognize the fact that management companies have been instrumental in helping to educate customers about the full benefits that vending provides. When Automatic Merchandiser last examined operator/management company relations several years ago, many noted that relations had improved because management companies were doing more to educate customers about vending’s benefits.
Many operators also recognize that the management companies have been helpful in winning price increases with accounts that oftentimes resist it.
What has happened recently, however, is that the bar has risen for operators since customers, now better educated about vending, are interested in newer features, such as remote machine monitoring and cashless capabilities. Management company executives are quick to point out that the big accounts they serve continue to seek more in return from their vending service providers.
TECHNOLOGY RAISES THE BAR
While a minority of vending operators welcome vending management companies’ help in offering these benefits, most feel that these are costly investments that will make it harder for the vending operator to earn a fair profit.
Many vending operators also feel that as more management companies have become established in recent years, competition has increased among management companies, and as a result, management companies are offering new technology to customers as a way to distinguish themselves in the market place. An offering that ultimately the vending operator has to pay for.
All of these issues culminated in the minds of many vending operators last year when Best Vendors sent a notice requesting its operator partners pay 2 percent of their net annual sales. Best Vendors has also been one of the more aggressive management companies seeking technology upgrades in its vending machines.
HAS FAIR PRICING BEEN AFFECTED?
Some operators claimed that it was unfair for a management company to charge a fee that some sublicensees were less able to afford than others. Some felt that it was particularly unfair because those who are more able to afford it are the same companies that are affiliated with Best Vendors: Canteen and its franchisees.
According to Phil Grossman, an attorney for the BVA Coop Inc., also known as Better Vendors Association, a vending buying cooperative, the question is about fair pricing. “It would appear that this (fair pricing) is not the case in that certain vending concerns are able to buy product at a lower cost than we (the independent vendors) can,” Grossman said.
“It appears to me that this is not correct,” Grossman continued. “It is not healthy for the business environment. Ultimately, it is not healthy for the vend customer. The independent companies may be smaller, but they deserve the same level playing field that everybody else does. The need for protection goes unnoticed and it hurts good people.”
Grossman does not believe there is much of an opportunity for an independent vendor or a buying cooperative to correct the problem through litigation. “To start a lawsuit of this magnitude is enormously costly for everyone. However, suppliers who engage in unfair pricing often meet with resistance and lost business from independent operators and buying cooperatives,” he said. “The answer lies in securing stricter enforcement of securing existing antitrust regulations by state and federal agencies charged with the responsibility of this enforcement.”
BUYING COOPERATIVES LOSE MEMBERS BUT ARE STILL STRONG
The buying cooperatives have lost membership in recent years due to the growth in Canteen franchisees since Compass Group acquired Best Vendors. Companies who become Canteen franchisees cannot belong to a buying cooperative since Canteen has its own purchase rebate programs.
It must be kept in mind, however, that the buying cooperatives have overall increased membership significantly over the past several years.
Brian Faley, executive director of the Better Vendors Association (BVA), the oldest and largest buying cooperative (in terms of annual rebates), said BVA lost about 50 members in the last three years, but its membership, at 350, has more than doubled in eight years.