If you’re interested in acquiring a vending machine for your office building or commercial location, or you want to start a vending machine business, it’s important to understand how these appliances are managed. Typically, vending machines are subject to a vending contract that sets out the terms of the agreement between a machine’s supplier and the business interested in using the machine.
There is no right or wrong way to draw up a vending machine contract, provided both parties agree to its terms. The most important part is how the exchange gets defined. Vending machines can be bought outright, leased for a monthly fee, or provided free on loan. Whatever the nature of the agreement, the vending contract must outline it and, thus, serve as a legal clarifier in the event of a dispute.
What Is a Vending Contract?
A vending contract standardizes the commercial relationship shared by a vending machine business and its customer. It is a legally binding document that details all of the terms agreed to by both parties. Like all contracts, it is designed to safeguard their respective interests and make sure the relationship isn’t changed without consent.
Some important information to include in a vending contract is the type of exchange (single purchase, lease, rent to own, free on loan, etc.), which party is responsible for repair and resupplies, which party is responsible for costs incurred, whether there are restrictions on placement and use and how long the relationship between supplier and customer will last.
There are no limits on the type of information you can include in a vending contract. The important thing is that both parties are happy with the terms before signing.
What Is a Vending Contract Template?
A vending contract template is a pre-formatted document that can be used as a guide when creating one of these agreements. Some templates come with a pre-designed layout but no content so that the user can add their own information to the marked-out sections. Other vending contract templates are prefilled with hypothetical information that the user can refer back to as a ‘correct way to populate their own agreement.
Whatever type of template you decide to use, download yours as an editable file and fill the sections with your own conditions, commitments, and requirements.
Vending Contract Template (PDF Template)
Download: PDF
How Does a Vending Machine Contract Work?
It depends on the nature of the agreement between the vending machine supplier and their customer. The two most common types of contract are (1) free on loan and (2) lease to use.
Free to loan contracts are typically reserved for agreements with large businesses that can attract a lot of foot traffic, such as shopping malls. The vending machine supplier allows the business to use their appliance(s) at no cost because the business’ location provides lots of customers. The business may get a small percentage of the machine’s profits, but, in this scenario, the vending machine supplier usually takes all the money. The business profits by providing its employees and/or customers with an upgraded environment.
Lease-to-use contracts are more common when the business requesting a vending machine lacks the foot traffic to justify a free-to-an contract. The business pays a fee to the machine supplier to have a vending machine on their site, and, in exchange, the supplier delivers, maintains, and refills it.
These are not the only legitimate contracts. The details of your contract may be different. Whatever your terms, make sure they are clearly stated in legal language in your vending contract.
How to Get Your Vending Machine in a Mall
If you own a vending machine supply company and want to get an appliance placed in a shopping mall, you need to approach the mall’s manager with a convincing pitch. First, determine what type of benefit the mall will receive. Are you willing to offer a share of the machine’s profits? Or can you convince the mall that getting a free (no lease fees or maintenance costs) vending machine is a big enough incentive on its own due to increased customer satisfaction levels?
Depending on the type of contract you want to offer, the mall (see above) shape your pitch around either (1) the potential impact on customer satisfaction levels and, in conjunction, the mall’s sales or average foot traffic and, in conjunction, the potential monthly profit for the machine in a desirable location.
Don’t forget to outline who will take care of the costs of resupplying and maintaining the machine. Consider this in conjunction with the benefit(s) that you’re offering the mall. If it is required to pay for these expenses? If so, will it expect a share of the profits? Include all of these terms in a proposed vending contract but, during negotiations, treat the contract as non-fixed and subject to change.
Your final vending contract should only be drafted and presented when both parties are in agreement and are ready to sign.
Essential Elements of a Vending Machine Placement Agreement
A vending contract should include (but is not limited to) the following information:
- The full name of both parties and their legal addresses
- The exact location(s) of the vending machine(s) on a map or diagram
- Requirements for safe and proper use of the vending machine(s), including servicing, routine repairs, cleaning, mechanical and electrical safety, pricing, etc.
- Which party is responsible for ensuring the safe and proper use of the vending machine(s), including servicing, routine repairs, cleaning, mechanical and electrical safety, pricing, etc.
- The lifespan of the contract (start and end date)
- Profit entitlements: who receives monetary profits from the machine(s) and what percentage
- Signatures of both parties
Pros and Cons of Vending Machine Businesses
As with all businesses, owning and supplying vending machines has both benefits and drawbacks. Here are some of the pros and cons to be aware of if you’re thinking about establishing this type of operation:
Pros
- Quite flexible in terms of the standard working day. Managers don’t need to work full-time from an office and can even monitor machines and their impact online. Typically, these machines only need attention when they break down or run low on supplies, so they may not be a full-time responsibility.
- Lower start-up costs and overheads. At a minimum, vending machine businesses require access to inventory for resupplying and a small team (or just one person depending on the number of machines) of maintenance operatives to keep the appliances running smoothly.
- Relatively simple product and trusted business model. Vending machines are familiar, desirable, and guaranteed to work when placed in the right locations. You don’t have to spend a lot of money and time convincing people to invest in a new product. They already know exactly what your business sells.
Cons
- Gradual profitability. The vending machine industry is highly profitable if managed correctly, but it’s rarely a ‘get rich quick option. It can take several years of reliable servicing and supplying before a business becomes very successful.
- You’ve got to buy the machine(s) outright. To get started, a business must invest in at least one vending machine, which can cost anywhere between $1,000 to $10,000 depending on its model, age, and condition. You’ll also need inventory to keep the machine(s) stocked. These are unavoidable start-up expenses.
FAQs
You need to write an appealing proposal for the owner of the site where you would like your vending machine to be placed. The success of this proposal will depend on your ability to convince the owner that having a machine benefits them in some way.
For instance, you might offer the owner’s business a percentage of any profits earned by customers on their site. Or, if it’s a location such as a shopping mall where foot traffic is extremely high, it may be worth taking on the expense of repairs, resupplies, and routine maintenance in exchange for a good spot. In this scenario, you will need to convince the business owner that having a vending machine will indirectly lead to increased profits (for example, your customers or employees will feel refreshed and happier, so they’ll spend more/work harder at the office).
There may be exceptions for some types of public space, but you cannot place a vending machine on private property without express permission. This usually comes in the form of a vending contract, but there is no legal obligation to sign one.
Nothing is stopping a site owner and a vending machine supplier from making a ‘gentleman’s agreement that isn’t written down. However, this type of partnership is much harder to verify in the event of a future dispute. Oral contracts are legally admissible, but they depend on having a recording of or witness to the agreement.
Final Thoughts
Whether you’re interested in supplying vending machines or acquiring one for your business location, it’s important to be aware of the processes involved. A vending contract, while not obligated, is an uncomplicated way to protect your investment, however large or small.
