I need some help on something I have virtually no experience...laundry. We are building out a small laundry facility at our apartment complex and expect to complete a revenue share agreement with an equipment vendor. They are offering 5,7, and 10-year terms...with the revenue to me increasing in proportion to the term. I assume this is negotiable but not really sure what to push for. Thoughts?

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Jeff Bridges

Investor
Hyattsville, MD

Jeff Bridges

Investor
Hyattsville, MD

Replied April 15, 2019 17:59

Originally posted by @Tony Castronovo:

I have a few recommendations and opinions. get multiple quotes from 2-3 vendors and use that to get them to match or beat one another. There are alot more terms than just the term limit. But to start, I would only consider a 5 or 7 year term. Imagine being locked into a 10 year contract with a vendor with horrible customer service and you cant do anything about it for a decade?! you should expect for a minimum of a 50/50 profit split, but you can likely get better like 60/40 or 70/30 if you have alot of units and revenue. That should not be dependent on term length. Don't let them set a minimum monthly revenue before payout of the profit sharing, it should be a profit split for all revenue period. Anything else is in their favor. Ask for new machines only to be in your contract, otherwise they can put in refurbs and they are within their right. Find out if its going to be coin op or card operation and if they accept debit card etc. Mine is residents load their smart cards via debit card on an app, so vendor does not need to collect coins or any money from onsite. I like this as machines wont fill up with coins or we dont have to worry about machine break-ins in the laundry room. So be clear on the method of payment for the machines and what those options on. Make sure they offer monthly audit reporting on their contract with all payments. Look at what the renewal terms are. are they automatic? do you have a tiny window to non renew? If so, ask to change it to go to month to month after the initial 5-7 year term. Those are the ones at the top of my mind.

Once you get some more quotes, share them on this thread and we can provide more feedback on if its a good or bad deal. I dont mind giving you an opinion either private message or on the board. dont make any commitments before checking with BP or checking with existing customer references to see if they are happy with the maintenance support and overall timliness of service. they need to fix the machines on a timely basis.

example of how smart card payment words (we used debit card payment, which does not have credit card fees for the vendor). They will charge alot more if they offer to place credit card readers. Not all vendors offer smart card/ value transfer machine vending, so you will need to shop around for vendors that can offer this.

https://www.laundryroomequipment.com/technology-so...

Here are some other reads I recommend to get ready to deal with the contract gotchas: