When you find a good location and reach an agreement with the location owner, the next step is formalizing the agreement by putting pen to paper. You can either sign a vending machine agreement or a vending machine contract. 

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A vending contract is legally binding document. You should carefully read the terms before signing it. This article will take you through some of the best practices surrounding the design of vending contracts, and give you a downloadable template you can customize.

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Finding Locations Is the Hard Part, Signing a Contract Is Easy

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You probably already recognize that finding a great location is one of the highest-leverage things you can do for your vending machine business. Your revenue as a vending machine operator will depend mostly on the level of traffic at the location and the quality of traffic.

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While it is one of the most important things you can do, scouting for vending machine locations and negotiating with property owners is tedious and time-consuming. Some people hire third parties to take over this function. With the help of such third parties, you can free up time to focus on the parts of the vending business you enjoy doing.

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A vending location list-building service, for instance, can give you a comprehensive list of all the potential vending machine locations in your area, plus their contact information. All you have to do is call the locations to confirm if they are open to having new vending machines on their premises. For just $19, Vending Locator will give you a list of 50 places where you can potentially place your vending machine.

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Clearly, finding vending locations is the hard part. Signing a vending contract is way easier in comparison. Nonetheless, you have to take the process of drawing up and signing a contract seriously. With a contract, you and the location owner will be legally bound to the terms and obligations you agree to.

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What Is a Vending Machine Contract?

After a location owner tells you that they agree to the terms stated in your vending machine proposal, you want to move fast to formalize the agreement. Some location owners will be okay with a verbal agreement, but some will be more comfortable with a written one.

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When this agreement is in the form of a written document, you will often see it stylized as either a vending machine agreement or vending contract. A contract is more formal than an agreement and is more legally binding. A vending contract is enforceable in a court of law.

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Where the location owner is wary of getting into a binding contract because they want some flexibility with the arrangement, you can enter into a non-contractual agreement. This will depend mostly on how well you trust each other to follow through with your obligations. Such an agreement will also give you more flexibility as an owner of vending equipment, especially when you are a beginner and still experimenting with business models trying to reach higher net sales.

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What Should a Vending Machine Contract Include?

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A vending contract will spell out the details of your vending machine agreement with the location owner and detail your obligations. Vending contract for your vending machines will typically include the following pieces of information.

1. Parties to the Contract

The vending contract will have the names of parties to the contract. You can enter into such vending contracts under your LLC. Under this section, you will also write the principal address of your LLC and that of the location owner.

2. Term of the Contract

The term of the contract refers to how long the contract will be valid (months or years). Detail the date from which the contract becomes effective and when it expires. Moreover, clarify what will happen when the contract expires. Will it renew automatically or is there a due date?

3. Ownership

If you own the vending machine, clarify that all rights and interest in the vending machine and its products remain with you at all times and not with the location owner. This should include the monetary benefits derived from operating the vending machines.

4. Utilities

Where the vending machine location owner is to provide utilities, e.g., water and electricity to vending machines, spell it out in the contract. If you are to take care of this expense, the location owner will also require that you include the information in the contract.

5. Theft and Vandalism

It is expected that you will bear the cost of theft and vandalism on your vending machines except where there are direct acts or omissions on the part of the location owner. The location owner is expected to take reasonable care to ensure the vending machine is not vandalized but still offers easy access to customers.

6. Vendor’s Obligations

As a party to the contract, there are specific obligations you are required to meet. These obligations include the following information:

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• Installing the vending machine within a reasonable time frame
• Regularly servicing and maintaining the vending machine
• Stocking and restocking the vending machine
• Doing repairs within a reasonable time frame whenever there is a breakdown

If you fail to meet your obligations, the location owner may be within his rights to remove your vending machines from his property, as you will be in breach of contract.

7. Limitation of Liability

It is critical that you detail the events where either party won’t be liable for losses, costs, or expenses. Such instances include:

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• Loss of profits
• Procurement of alternative goods
• Special or incidental expenses
• Damages to property

To protect your personal assets, it is best to sign a vending contracts under an LLC instead of your name.

8. The Nature of the Relationship

You will likely be operating as an independent contractor. Spell it out in the contract. As an independent contractor for vending machines, you need to make the following issues clear:

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• There is no employer-employee relationship. You are not an employee of the location owner.
• Taxes. You are responsible for filing and paying taxes of the vending operation.
• Compliance with state and federal laws. As the vending machine owner, you are responsible for securing the necessary permits and licenses to run the vending machine business within the law.
• Contractual obligations. The location owner cannot enter into a contract or incur a legal obligation on your behalf. His business and your vending machine business are separate.

9. Contract Termination

You should spell out how either party can terminate the vending machine contract. You may want the agreement to say that either party can terminate the contract at any time without cause upon (specified event) with a written notice.

10. Miscellaneous Requirements

Based on the nature of your vending machine business and your lawyer’s recommendations, you can include other requirements as may be necessary.

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Vending Machine Contract Template PDF

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We’ve consulted with a legal expert and created the following vending machine contract template. You can download, print, and customize it for your own use.