What should I check before buying an arcade business?

An arcade looks simple from the floor: rows of machines and a counter. Behind it sits a mix of ownership, software and customer balances that a buyer has to untangle. Ask for the list in writing, then check it against the machines you see, against the contracts and against what the seller’s accountant records.

Owned machines and revenue-share machines

Some machines belong to the seller and others are placed by an outside operator who shares the takings. The second kind does not come with the business, and the agreement may need the operator’s consent to continue with you. Ask for each placement agreement and ask the operator directly whether it will carry on. Your lawyer can say how those contracts work on a sale.

Card or token system

Most arcades run on game cards or tokens. Ask who owns the card software and readers, whether a licence or support contract moves to you, and what customers have loaded onto cards that has not yet been played. Those balances are an obligation to customers, so ask your accountant how to treat them in the purchase.

Machine age, parts and prizes

Ask how old the machines are, which ones are out of order, and who repairs them. Some older models are hard to service because parts are scarce. Count the prize stock and ask how the seller values it. Confirm with the regulator in your province what amusement safety requirements apply, and ask the seller for proof of recent inspections.

Parties and the lease

• Ask for the party and group booking calendar, and how deposits are held.
• Confirm the lease permits an arcade and can be assigned to you.
• Ask about the landlord’s consent and any change to the terms.