Make Laundry-Room Service Contract Work for Association

November 16, 2017
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Some condominium buildings have a shared, central laundry room for members, instead of washing and drying appliances in units. Even in planned communities with freestanding homes, the association may decide to use a common laundry room. Having a well-maintained laundry room in a condominium building or a community is important for both residents and associations. Associations benefit from ancillary income, and members don’t have to find off-site laundromats, where they may have to spend hours waiting for machines.

Engaging a service provider to handle your community’s laundry facility can save time for you and your management staff, who are too busy for day-to-day issues that arise from this amenity. But the contract you negotiate should be thorough. It should outline the expectations of both parties during the time period of the contract, including maintenance, service, and payment.

The money you may earn is an important negotiating point. Most laundry-room contracts are on a concession basis. This means that the laundry-room service company installs the machines at its own expense and pays you a flat fee, a percentage of the receipts, or a flat fee plus a percentage of the “override.” The association pays for the utilities. Typical leases are five to 10 years in length, and the term is mostly driven by the equipment cost and the return that the laundry company can expect from collections.

But besides money, there are many other critical factors to raise and resolve when negotiating with a laundry-room service company. You will need a specific agreement written for the particular needs of your community. The following are some important points to consider when negotiating a laundry-room service contract.

One of these is the issue of ancillary uses to the laundry room. Laundry rooms may be used not only for washing and drying. If you negotiate a contract with only these activities in mind, you may forgo other potentially profitable activities that you, or someone else, could perform. When members spend time in the laundry room, they may get hungry and thirsty. Or they may get bored waiting and may want to buy a newspaper or a paperback. Of course, there are vending machines that will satisfy these members. If your service contract grants the laundry company unrestricted use of the laundry room, you may not be allowed to participate in these potentially lucrative activities.

A convenient location is also important. The operator may push for a central location for your laundry room because it’s easier to service the machines. But the association has to consider what’s convenient for the members. If the community is spread out over multiple buildings such as in a townhouse garden-style arrangement, you may want to provide laundry facilities at each building, rather than in one centrally located laundry room. Or if you manage a large high-rise condominium, you may want to provide laundry facilities on every floor or in several locations in the building.

For five additional ways to make a common area laundry room work for your community, see “How to Negotiate a Favorable Laundry Room Service Contract,” available to subscribers here