Letter of Intent Template for Buying a Vending Machine Route

Parties and Transaction Structure

Identifies the buyer and seller, clarifies whether the deal is an asset purchase or entity acquisition, and establishes that the buyer is acquiring the route as a going concern including machines, location contracts, supplier relationships, and route intellectual property such as customer lists and route schedules.

💡 Asset purchase is strongly preferred over entity acquisition for vending routes to avoid assuming hidden liabilities, undisclosed cash shortfalls, or prior tax exposure. Ensure the asset schedule (Exhibit A) is prepared by the seller before LOI signing and lists every machine by make, model, serial number, age, and location. If the seller resists a full machine inventory at LOI stage, treat this as a red flag and insist on it as a due diligence deliverable within the first 10 business days.

Purchase Price and Valuation Basis

States the proposed purchase price, the valuation methodology used (typically a multiple of seller's discretionary earnings or verified net cash flow), and how the price was derived from the seller's financial disclosures received prior to LOI execution.

💡 Never anchor the purchase price to seller-reported cash collections alone. Vending routes have a well-documented history of underreported income — both understated for tax purposes and overstated to buyers. Request DEX telemetry reports, which record machine-level sales data electronically, alongside supplier invoices and bank deposits as the three-legged verification framework. A price adjustment clause tied to a 10% revenue variance threshold is standard and reasonable; sellers who resist this clause are often concealing revenue discrepancies.

Deposit and Good Faith

Establishes the earnest money deposit amount, where it will be held, conditions under which it is refundable, and the timeline for its release.

💡 For vending route deals under $500,000, a deposit of $5,000–$10,000 is typical. For routes above $500,000, $10,000–$20,000 is reasonable. Keep the deposit fully refundable through the entire due diligence period — the physical inspection of machines distributed across 20–80+ locations is time-consuming and may surface condition issues that materially change deal economics. Sellers who demand non-refundable deposits before due diligence is complete should be approached with caution.

Due Diligence Period and Access Rights

Defines the length of the due diligence period, the specific access rights granted to the buyer including physical machine inspection, financial record review, and location visits, and the seller's obligations to cooperate and produce documentation.

💡 Thirty business days is the minimum viable due diligence window for a vending route with more than 20 locations. For larger routes with 50+ machines or multiple product categories, negotiate 45 business days. The right to ride along on actual route collections — observing machine fill levels, cash collection procedures, and host-site relationships firsthand — is valuable and should be explicitly included. Sellers often resist location visits out of fear of alerting host-site managers to the pending sale; negotiate a protocol where Buyer accompanies Seller on normal route days without disclosing the acquisition until the parties are ready.

Location Contract Contingency

Establishes that the closing is contingent upon confirmation that key location contracts are assignable to the buyer, and sets thresholds for what constitutes an acceptable level of contract transferability.

💡 Location contract risk is the single greatest post-close threat to a vending route acquisition. A host site that terminates its agreement after closing — or simply switches operators — can eliminate 10–30% of route revenue overnight. Push sellers to convert verbal agreements to written form before closing, and request that seller introductions to all key location managers be included in the transition period. If seller cannot produce written contracts for top locations, consider structuring 15–20% of the purchase price as an earnout tied to location retention for 12 months post-close.

Machine Condition and Capital Adjustment

Establishes the buyer's right to assess machine condition and age, and provides a mechanism to adjust the purchase price based on machines found to require near-term replacement or significant repair.

💡 Machine age is a major value driver and killer in vending route deals. A route with a fleet averaging 12+ years old carries significant hidden capital expenditure — new cashless-enabled machines cost $3,000–$10,000 each, and buyers will inevitably need to upgrade to accept credit cards and mobile payments as host sites increasingly require it. Build a machine-by-machine age and condition matrix during due diligence and use it to quantify replacement exposure before finalizing price. A reasonable seller will accept credits for machines clearly beyond economic useful life.

Deal Structure and Financing

Outlines the proposed financing structure, including SBA loan terms, seller note terms, any earnout provisions, and the allocation of the purchase price across asset classes for tax purposes.

💡 SBA 7(a) loans are the most common financing mechanism for vending route acquisitions and can cover up to 90% of the purchase price for qualified buyers with routes generating documented cash flow. The SBA requires at least two years of tax returns showing viable cash flow — which is precisely why revenue verification during due diligence is critical before applying. Seller notes of 20–30% are viewed favorably by SBA lenders as they demonstrate seller confidence in the business. Earnouts tied to location retention are one of the cleanest ways to bridge a valuation gap when location contract stability is uncertain.

Non-Disclosure and Exclusivity

Confirms mutual confidentiality obligations and grants the buyer an exclusive negotiating period during which the seller agrees not to market the business or negotiate with other potential buyers.

💡 Forty-five days of exclusivity is standard for a vending route deal of average complexity. For larger routes with 50+ machines or multiple product lines, negotiate 60 days. Sellers who resist exclusivity are often running a competitive process or have another buyer in the wings — clarify their situation before proceeding. During exclusivity, move quickly on machine inspections and financial verification so that the seller has no legitimate basis for feeling the process is stalled.

Transition and Training Period

Defines the seller's obligation to provide post-close training, route introductions, and operational support to ensure business continuity and host-site relationship transfer.

💡 In vending, relationships with location managers are everything — and they live in the seller's head, not in any document. A 30-day in-person transition is the minimum needed to transfer these relationships credibly. For routes with anchor locations representing more than 15% of revenue, negotiate individual introduction meetings between the seller, the buyer, and the location manager prior to or immediately following closing. Some buyers offer sellers a modest post-close consulting fee of $1,500–$3,000/month for 60–90 days to incentivize genuine cooperation during the handoff.

Non-Compete and Non-Solicitation

Establishes geographic and time-based restrictions preventing the seller from competing with the buyer or soliciting host-site locations or employees after the sale.

💡 A 3-year, 50-mile non-compete is standard and defensible for a vending route acquisition. The geographic radius should mirror the actual operating territory of the route — if the route is tightly clustered within a 25-mile area, use that radius. Non-competes in vending are particularly important because the seller knows every location manager personally and could rebuild a competing route rapidly using those relationships. Allocating a meaningful portion of the purchase price (typically 10–15%) to the non-compete covenant in the asset allocation schedule strengthens its enforceability.