Contingencies to Consider in a Laundromat Purchase Agreement
Laundromat Advisor, Consultant and Expert Witness
July 2, 2024
Although I currently have been retained in over fifty lawsuits and been designated as an expert in the Laundromat field by Federal and State courts, I started in this business in my early twenties as a newbie owner. I eventually was a significant Laundromat equipment distributor and P&G soap distributor during my career, and I have owned or operated in excess of fifty Laundromats: coin, card, token and even ticket Laundromats. I’ve owned many types of Laundromats: big, small, new, run-down, remodeled, winners and loser stores. Regardless of the success or size, all of my Laundromat ownership interests started with an offer to purchase.
When I was new to this business, I relied on forms provided by others on what I should be including as a contingency clause but as time went on, I developed my own list of important issues. Not all of these contingencies were needed on each and every offer that I made, but I always reviewed them before making an offer. Here is a partial portion of that list:
1. Seller to provide copies of building permits or certification that all electrical, plumbing and equipment installations were done to code and with the proper building permits. (Verify this information with a trip to the local building department since these permits are public records and can reveal who did the work and what work was performed.)
2. Seller to provide access to buyers and/or their agents during a due diligence period for inspections to the condition, installation and functionality of all plumbing, equipment, electrical, roof condition, ADA compliance, mold, alarm, security cameras, as well as the right to withdraw from the purchase, without penalty or delay, if any of these inspections reveal an issue unsatisfactory to buyer.
3. Seller to aid Buyer in securing a lease with terms acceptable to Buyer. (I always tried to obtain a lease with a minimum remaining period of 25 years including options, as long as the options were not at “market rate” but with the same terms and conditions as the lease agreement.)
4. Seller to provide manuals and programming instructions for all equipment installed.
5. Seller to make introduction to employee(s) and/or contract labor person(s) including any contract agreements between the parties. (This includes repair and service people.)
6. Seller to identify the alarm company and name of representative as well as manuals, codes and details of alarm and camera settings.
7. Seller to provide all keys for all locks to buyers and notification of all personnel that possess keys (store, change machine, washing machines, dryers, etc.)
8. Seller to identify vending machine_ (water, soda, candy and other vending items) _and contact information for any non-owned item.
9. Seller to warrant that all water service for the Laundromat account is not provided to any other business. (It’s not uncommon in an older building, when water was cheap that landlords gave a small discount to the Laundromat in exchange for paying for a single meter to his shopping center. Check with the water department on the number of water meters on the property for verification.)
Keep in mind that verifications, inspections, ADA violations, permits and zoning issues are the ultimate responsibility of the buyer. It is not adequate to rely on the seller or your broker to verify all the information.
P.S. Let me know if you want the complete list of items to be included in your purchase agreement.