buying commercial route

[Ed Reedy]

I have a guy that is doing a 1,000.00 a month all commerical work. He is now 72 and wants to sell his route. I still have some research to do before I make an offer. The route is in the south suburbs of Chicago, Il. The question is if everthing looks OK! what is a fair offer for his route.

Thanks
Ed Reedy

[A and J POWERWASHING]

you would have talk that over with him you are go to maker 12,000 if you keep all of his account and what ever you keep up on your own

[We Wash Concrete]

There's a ton of variables that decide what a fair price may be for the routh. Off the top of my head I would think some of the important ones would be how long he's been in business, what was the business income for the last 5 years, what kind of work does he do, what kind of clients does this consist of; regular maintance or one time cleanings, does any equipment come with the deal, and there's many more.

I bought a window cleaning route a few years ago. The price for these are usualy around 3 months gross to 12 months gross income. I'm happily paying 12 months gross because I know the accounts are very solid accounts because they were well maintained and many of them were over 20 years old. However, if the window route was poorly managed, and the accounts where only 5 years old, the route may not even be worth the 3 months gross.

If I were going to buy a route I would have a contract that allowed you and maybe your cpa to review everything -- under the agreement that you would not use that information to gather the accounts on your own or against him in any other way if you decided not to buy it.

[MMI Enterprises]

3 to 6 mon. gross as long as they good customers of at least a half year or so and on at least a 6 mon. contract that contains proper legal verbage to bind them to you. Real Estate contracts or options sometimes include such with User/Agent lingo but I have never actually seen a good example in this type service industry. Have seen subcontracting stuff over the years from franchisers or 3rd party mangers like Jani King or Johnson Controls but that isn't quite the same as they usually are still in control or doing the accounting while the accounts are being paid for on a time basis.
1K is small amount so I wouldn't worry about it much.
Cleaning service type businesses don't go for much more then mentioned unless equipment, employees,materials, name, etc. is coming with them.