It never fails to amaze me that strangers come up to me and offer to give me $20,000 to $100,000 to invest. How did these people get that much free capital if they are willing to give it to a stranger so easily. Except for my first two partners I’ve never accepted any of these offers, but if you really want to retire to Angeles City, don’t fret. There are plenty of “nice guys” in Angeles that would be glad to help you “invest” your life savings.
Of course there are some success stories of guys that came here, opened a bar and survived for a number of years and actually made some money, but there are just as many or more horror stories of Business 101 Angeles style.
The first step is to decide if you are going to by a bar and run it yourself, or are you going to have some partners. The next thing to decide is who’s name will you put the business in, since foreigners cannot own 100% of a business in the Philippines. Sometimes it seems easier to link up with an expat that already has one or more bars because it solves the question of who’s name to use for a business license.
RULE #1: Never, never, never put the business in your girlfriends name.
RULE#2: Never put the bar in your wife’s name unless you have been married more than 18.47 years.
RULE #3: If the deal sounds too good to be true, it probably isn’t true.
RULE #4: There should be a waiting period for buying bars just like the waiting period for buying guns in America. Take two days before signing anything (most contracts for bars are worthless pieces of paper) and talk to other bar owners/managers about the deal.
TRUE STORIES : The following are real life examples of bar ownership in Angeles and Subic City between 1995 & 2000.
Guy #1, who I’ll call Freddy (not his real name) comes to town with his life savings of about $35,000. Shortly after his arrival he decides to buy a little hole-in-the-wall bar located all by itself on a quiet street. He gets about a three year lease for $25,000 (which was about $22,000 too much). Immediately the seller takes a small part of the twenty five grand and renovates the place next door and opens a nicer little bar right next door. Despite this, the guy has some fun and is enjoying life in his own little place. After about a year he breaks up with his girlfriend and shortly thereafter she tells him she wants $10,000 or she is going to make trouble for him. He refuses and her sweet little underage sister who has been working in his place as a GRO (Guest Relations Officer) goes to the police and says she is only 16 and nasty Freddy has been forcing her to have sex with customers. In the Philippines this is called “white slavery.” Eventually he flees the country leaving behind his investment and many personal possessions. He arrived in Thailand with his new life savings of about $1,000. With him out of the country Freddy’s bar reverted back to his neighbor that leased it to him. Shortly thereafter, the neighbor hired Freddy’s ex-girlfriends sister as a GRO to work in his place. She has either aged by two to three years since her complaint a few months ago; is still underage; or never was underage when she filed the charges. Yes, just as under aged girls can get a fake birth certificate so they can work in a bar, some girls over 18 can get a fake birth certificate that states they are under age (see next story).
Guy #2, I’ll call Billy. Billy ran several nightclubs and other businesses in Angeles for many years. He has a Filipino wife, but as will happen to everyone from Bill Clinton to Jessie Jackson, he met Miss Temptation. He had a fling until his wife discovered it and he broke it off. The girl, who the courts proved was 18 ½ when the affair started, got a fake birth certificate that said she was 16 and she filed rape charges. Billy fought the charges, but was eventually put in jail. Over three million pesos and a year later the judge dismissed the charges and he was released. He is now in the process of recovery and plans to file counter charges against the girl.
Guy #3, I’ll call him Burt. Burt was a frequent visitor to Angeles for 8-10 years. Finally, he met Mrs. Right and they were married. Shortly after their marriage they decided to move to Subic and open a bar. Burt found a place for a reasonable amount of “rights” and with minor renovations they opened up for business. Burt taught his wife the basics of saving enough money from the receipts to pay rent, electric, salaries, and to restock. The next step was to buy a jeep to get around and to furnish the matrimonial home with TV’s, stereos, etc. Now, it was time to sit back and enjoy the good life – wrong. The wife filed for divorce and got the bar, the jeep, the house full of furniture and Burt is back to bar hopping in Angeles City.
I won’t make up any names for the next bar owners, but there is one guy in Angeles that has made a great living by selling bars and then buying them back. He runs a good little establishment with a few dancing girls. Guys come to town and eventually drift into his club. Lots of guys sitting around drinking. And yes, this place is for sale for only $30,000. The new guy buys the place and immediately all the previous owners friends start drinking somewhere else. Within a few months the guy has to shut the doors because he has no customers. The previous owner being a nice guy buys the club back for $15,000. Within a few weeks it is full of his buddies again, waiting for another fool with a pocket full of cash that wants to get rich running a girlie club.
OK, so buying, renovating and running a club in a strange land sounds complicated. Maybe you should get a partner that already knows the business. There are a handful of guys in Angeles that make a good living by selling percentages of their clubs to guys that want to be able to say they own a bar. Let’s take a second to think about this one. If a guy is successful he would be making enough money to reinvest in his business so the profits from his hard work would be his to keep. Why would he need you to invest in his business?
Guy#4, I’ll call Marty. Marty showed up with about $10,000 in cash. He asked me to safeguard it until he found a good club that needed a partner. The very next day he came to me and asked for the money. When he told me what club he was going to buy 20% of, I refused to give him his money. I counseled him for 30-45 minutes trying to talk some sense into him, but in the end it was his money so I gave it back to him under extreme protest. The owner immediately infused $200-300 into the place and all of Marty’s friends hung out there to drink. Several months later when Marty was back in his country the owner sold the rights to the business for a pretty good sum and opened up a new bar down the street. Marty returned and was told by the owner that he had no money to give him because he had just invested in still another club. Now 4-5 years later, Marty has not seen $1 of his initial investment. The guy he invested with has bought and sold four clubs since the one where Marty invested 20%. Several more guy have come to town and told me they were going to invest with this guy and I gave them Marty’s email address and they decided not to get in the bar business. But, amazingly three other guys invested $15,000, 30,000 and most recently $100,000 with him. His new bars are no better than the one Marty invested in, but the owner is now driving a decent car instead of a rented motorcycle.
Guy #5, I’ll call Lou. Lou came to Angeles with bar fever. He invested $60,000 for 60% of a bar that would be renovated. He wouldn’t have to do anything because his partner was going to set up a “management contract.” The club was renovated and reopened with lots of fan fare. However, despite the fact that Lou’s partner ran a number of other clubs in Angeles, there were never any profits after the operating expense and the “management fee” were deducted. In fact, on some months Lou had to pay his partner his share of the “loss.” Mad as hell at his partner, he decided to run a club without a management contract, so he took a bunch more money and bought into a partnership with Marty’s partner (see #4 above). The last I heard he was back in Australia.
Guy #6, I'll call him Harry. He came to town a few years ago and set his sights on becoming a partner with a guy that had more than one club. That guy must be successful...right? After investing an obscene amount of money (well over $200,000) he now has his own little club that is worth no more than 10% of the money he invested in the last few years. He no longer talks to the the partner he originally invested with.
Next there have been too many guys to name. They come to Angeles and meet a bar owner that agrees to sell them 50% of their bar for only $15,000. They go back to their country and return within a few months to discover that the owner sold 50% of the club to six or eight other guys before he fled town. This hasn’t happened in the last 4-5 years, but it can happen anytime a visitor rushes into a deal and then returns home.
There are lots more stories I could cite for both categories, but they shouldn’t be necessary. As I said above, there are lots of guys in Angeles that will be glad to take your money. Angeles City gives new meaning to the term “Caveat emptor" (let the buyer beware).
The only sure fired way to become a piso millionaire in the Philippine bar business is to bring two to three million pesos. Buy a nice little club, renovate it and open up, When you are down to one million pesos…..quit!
GRO’s: Guest Relations Officers. These are girls that work in the go-go bars and karaoke’s that wear regular street clothes and entertain male customers.
RIGHTS: This is the amount that you must pay the former owner to take over an establishment. It is an arbitrary amount that has little to nothing to do with what that owner invested in the establishment. The rights vary from zero (usually in cases where the individual pays 2-3 years rent in advance or if the property in question wasn’t a bar before) TO OVER $100,000. Also called “key money” in some countries. NOTE: When you pay the rights the lease is transferred to your name, but you still have to pay rent.