Buying a laundromat in New South Wales can be an attractive investment. Laundromats, also known as coin laundries, are often considered recession-resistant businesses, offering steady demand with relatively low staffing requirements. They appeal to first-time business owners as well as seasoned investors seeking reliable cashflow.
Still, a laundromat is not a “set and forget” purchase. Behind the rows of washers and dryers lie complex issues of leasing, compliance, equipment finance, and due diligence. This guide explains what you need to know if you are considering buying a laundromat in NSW.
Why Buy a Laundromat?
Some of the main advantages of laundromat ownership include:
Recurring demand – People always need clean clothes, which gives coin laundries a measure of stability even in tough economic times.
Low staffing – Many sites are unattended, or only require part-time staff for cleaning or wash-and-fold services.
Scalability – Once systems are in place, some owners expand by buying multiple locations.
Additional revenue – Dry cleaning drop-offs, vending machines, ironing, and delivery can supplement the core self-service offering.
But success depends on more than just opening the doors. Location, lease terms, competition, and equipment condition all play a significant role in profitability.
The Purchase Structure
In NSW, laundromat acquisitions are almost always structured as an asset sale. You purchase the assets of the business – typically the equipment, goodwill, lease rights, and sometimes contracts – without taking on the seller’s company.
Even though this structure is simpler than a share purchase, risks remain. Machines may be under finance leases, there may be unpaid outgoings, or employee entitlements may not have been disclosed. Careful checks and tailored contract terms are critical.
Key Steps in the Process
1. Preliminary Agreement
Many transactions begin with a heads of agreement or term sheet setting out the price, settlement date, and key conditions.
2. Due Diligence
Due diligence is your opportunity to verify the business. Common checks include:
Financials – Profit and loss statements, tax returns, bank records, and utility bills. Electricity and water usage are key indicators of true machine turnover.
Lease review – Rent, outgoings, options to renew, permitted use, and restrictions. The lease is often the most valuable part of the business.
Equipment – Age, condition, and service history of washers, dryers, and payment systems. Clarify whether machines are owned outright or subject to finance.
Licences and compliance – Trade waste approvals, fire safety, and development consent conditions.
Contracts – Supply and maintenance agreements, dry-cleaning subcontracting, or staff arrangements.
3. Contract of Sale
The formal contract sets out the purchase price, apportionment of stock (if any), employee entitlements, warranties from the seller, and what exactly is included in the sale.
4. Settlement
On settlement day, you pay the balance of the purchase price, take over the lease, and receive the keys, manuals, and records.
How Laundromats Are Valued
There is no fixed formula for valuing a laundromat, but buyers usually consider:
Location and visibility
Length and terms of the lease
Age and efficiency of machines
Utility costs
Competition in the area
Services offered beyond coin laundry
Stability and verifiability of reported earnings
Because cash takings are common, verifying income can be difficult. Electricity and water bills are often the best cross-check of whether reported turnover matches actual usage.
Legal Issues to Watch
Some recurring legal issues when buying a laundromat in NSW include:
Lease assignment – Landlord consent is almost always required, and conditions may be imposed.
Personal guarantees – Many landlords insist the new tenant provide a personal guarantee. Understand the risk this poses to your personal assets.
Equipment finance – Machines may be subject to finance or security interests registered on the PPSR. A search should confirm you will receive clear title.
Employment obligations – If the business has staff, employee entitlements must be dealt with correctly under the Fair Work Act 2009 (Cth).
Environmental compliance – Laundromats use significant water and detergents. Local council trade waste and discharge rules must be followed.
Risks and Pitfalls
Even with an asset purchase, there are traps for the unwary:
Expensive equipment breakdowns shortly after settlement
Inflated financials or under-reported expenses
Rising competition, including new apartment buildings with in-unit laundries
Sharp increases in electricity and water costs
Lease clauses restricting trading hours or services
Negotiating robust warranties and indemnities, and conducting thorough checks, are your best protections.
Financing the Purchase
Banks will sometimes lend for laundromat acquisitions, but conditions can be strict. They will usually want:
Because laundromats are cash-heavy businesses, lenders may also require additional security such as residential property.
Practical Considerations
Beyond the paperwork, buyers should:
Visit the business at different times to observe actual customer traffic.
Speak with neighbouring tenants about local trade and competition.
Review demographics – coin laundries thrive in areas with renters, students, and travellers.
Decide whether you will run the business personally or rely on staff.
Budget for capital expenditure – machines may need upgrading within a few years.
Conclusion
Buying a laundromat or coin laundry in NSW can be a steady, cash-generating investment if approached carefully. While the business model seems straightforward, the details are not. Lease terms, equipment finance, compliance obligations, and accurate financial reporting all carry significant risks if overlooked.
If you are considering buying a laundromat, professional advice is essential. An experienced business lawyer can guide you through due diligence, negotiate the contract, and ensure you know exactly what you are buying.
At Thornton + King, our business lawyers regularly assist clients with laundromat purchases and other small business acquisitions across Sydney and NSW. Contact us today to discuss your plans and get the right legal advice before you commit.
