From the Baron www.BaronBonk.com How To Lose Dodgy Money!
It is time once again to have a rant about those who buy bars, or invest in them, without doing their homework. That in many cases is simply checking out exactly who you are doing business with. Normally he is that nice smiling person who promises you a stake in a gogo that includes undefined owners 'rights,' and a monthly payment that will make you think working for a living is a fool's game. Sadly owners rights is what he will get too, as well as management rights, which means for every free beer you get, he gets ten and those dividends never get anywhere near expectations - probably because the management fees include a first class trip home to see Mum for her birthday, as well the not insignificant stipend of several mea nois and other hangers on. And just as probably the fifty percent that was purchased was also bought by another investor, or several. There are more than a few situations I have heard about where there appears to be well over 10 0% investment in a given business.
The reason for this my most recent tirade is because I met two gentlemen who had invested a decent sum in a bar only to get the total run around when questions were asked. At the same time, I received an email from a man asking if I knew somebody who would like to buy 50% of his gogo.
The gogo deal was of interest to a friend of mine, so I thought I would follow it up. Firstly I know the guy making the offer and as far as I aware he is an okay person. I have been around the block a few times and after running pubs for a while you get a good idea of who to trust and who not to. However my first move was to ask questions of other bar owners to see what they knew. And, of course, they knew something and I was told the lease was a nightmare with a host of problems. With this knowledge I met with the seller and asked him questions which I thought I already knew the answers too. He came up with a different scenario which suggested the lease might be okay after all. So I now asked to see the lease and said I would get it translated. The seller was confused. Why, he wondered, did I not want to see the figures? The answer is I know enough about the business to know that gogo should make money, but without a lease it is worthless. So having g ot the lease I employed a Thai investigative type to fully research all aspects of the lease - from the freeholder up, check the licences with the police, and find out anything he can by talking to local Thais and even the staff. Only then was I prepared to call my friend in the UK and say this maybe a deal for you. But even then he will still need to form a new company, transfer the lease to that company's name and set up a proper shareholders' agreement with the other shareholders. And, of course, I know he will refund the 30/40K I have spent checking out the deal.
Now I return to the sad case of my acquaintances who had unwisely invested a sizeable sum in a bar. I never really got to the bottom of how and why the deal was done but I have an idea. They were in a bar chatting to the owner and they rather unwisely said they had some money and would like to invest in a bar. Then as they say, the rest is inevitable. An agreement was drawn up in English and the money transferred. The investors never asked around, no doubt warned off with cautions about keeping it secret or others would want the deal. They never employed a lawyer or even checked the lease. The nice man selling the investment has popped up on my radar screen before when I had a similar conversation with another one of his unhappy investors. Needless to say things did not go well and when they asked to see the accounts they were told it was none of their business. Now the attitude of the main man was: Oh dear, this is not going to well - but there are di vidends. Unfortunately they came to only about 20% of what was promised. When the duo referred to the agreement they were told that as it was in English it was invalid in Thailand . He might as well have said: "I have conned you." I will end this sad tale here so as not to get myself sued for defamation by identifying the parties. In fact this story is part true and part fiction, but is not untypical. In fact the unwise men ended up by agreeing to another percentage deal elsewhere that may, or may not, get them some of their money back.
Thereby hangs another tale. The reason that many of these dubious dealings do not come out is because the person who has been "had" is too embarrassed to admit they have been "had:" That and all too often the money involved is slightly tainted. (cash earnings etc.). So most people having been conned go away quietly - but poorer. For those who remember the case of Santos in Warblers, his real problems came when he took the legitimate life savings of a man in a wheelchair. If he had stuck to people with a bit of dodgy money to invest, he may never have lost out.
So please please do not make an investment in a bar without fully checking out all the individuals involved. If they are frightened of you asking, ask yourself why? In the case of the gogo I was offered, the seller was keen that I check everything - and why not?
It is a jungle out there in the urban barscape so do not get devoured by a charming beast. Or as the old adage goes "Beware of Greeks bearing gifts." But these days it is just as likely be any other member of the EU!