Operating Without a Contract
Who “Runs” Your Business, the Location or You?
by Jack Guarnieri, Jersey Jack Pinball & PinballSales.com
Not unusually, I received a call recently from an operator. I’ll call him Bill. He asked if I thought it was okay to sell games directly to a location. I replied that if I know it’s a location that has an operator, I personally try to steer the them back to their operator instead.
In today’s world, many locations are in a position to buy and operate games. Bill was talking specifically about a bar in which he had many games in for a long time. Apparently, every couple of months or so, the location demands this or that new game. If Bill is hesitant to meet the request, they either threaten to buy the game themselves or actually do it!
I asked Bill if he had his state association-approved amusement agreement in place with the location. He said, “They won’t sign it.” Wow! So here’s an operator who’s had many games in an arcade bar for several years and he cannot get to the point where the location and he are on the same page about equipment purchasing.
Further, Bill told me that his location contacted several distributors to buy equipment. The dealers didn’t sell to him, but instead called Bill and told him what they were trying to do. I remember the same thing going on years ago but was surprised it still happens. After all, we see many manufacturers and distributors at major trade shows for the pizza, bowling, bar and other industries. What do the exhibitors think (or hope) will happen there?
I spent the next 15 minutes or so on the phone with Bill trading location war stories. Without a signed, legal location agreement, Bill is a victim to this location terrorizing and extorting him whenever they want a new game. As for this most recent instance, Bill said the piece they want would take years to pay itself back. If that’s true, what’s the harm in “letting” the location swallow a “gem” like that, absorbing the ROI hit instead of the operator?
With that thought, I asked Bill who handles the repairs on the games the location owns. Not only does Bill take care of that, he does it for nothing! I understood, but come on Bill, you can double as a doormat! This location really has taken advantage of him. To top it off, when asked if the location makes money for him, he said it does “OK,” which is vague operator speak for not wanting to move the games from the location and looking for a better place to put them.
After a while, I suggested Bill actually sit down and talk with the owner of this establishment. This is a no-brainer, right? The reason the location is calling around to buy the latest and greatest game of the moment isn’t because someone would actually sell the game to them, but because Bill doesn’t have a signed contract that specifically prohibits that. It is also because Bill hasn’t built a good working relationship with them. If these two things aren’t in place, there won’t be any peace for him there.
When Bill repeated that the owner would not sign any agreement, it was clear to me that he was doomed to be a victim in his business, subject to the wishes of the location on a daily basis. This got me wondering how many operator-location relationships are like this one? What would you do?
Bill obviously needs to make some decisions to take better control of his business. Also, how many other locations does he have that do the same thing? After all, locations talk to each other just as many operators (should) talk to each other. If Bill finally does have enough of this situation and pulls his equipment, what other operator would go in without a signed location agreement? Sadly, “many” is probably the answer.
Jack Guarnieri started servicing electro-mechanical pinball machines in 1975 and has been involved in every phase of the amusement game business since then. He was an operator in NYC, then began a distributorship in 1999, PinballSales.com, selling coin-op to the consumer market. In January of 2011 he founded Jersey Jack Pinball (named after his RePlay Magazine pen name), which builds award-winning, full-featured, coin-op pinball machines. Email Jack at [email protected] jerseyjackpinball.com.