Fighting back - CSC / Coinmach increased laundry fees by 9.75%
It's no secret to any investors and landlords out there that many laundry rental companies are unscrupulous. Well, here's another example with CSC, who owns CoinMach. Except this time, I'm fighting back. The ROI of this effort is certainly not worth my time even if I win, but enough is enough. We, as investors, can't keep letting these companies bully us around. Companies bullying customers via contract terms is a pet peeve of mine, given my experience leading strategic sourcing teams.
I have a fourplex in California that has a laundry room with washer & dryer managed by CSC / Coinmach. I got a letter in May, stating that "Beginning this month, you will see an Administrative Fee of 9.75% deducted from your gross collection." I heard they sent this letter to all their customers. With a 50/50 revenue split, this means they just shaved off about 20% of my net laundry income. I read through the agreement to make sure this is not allowed per the contract, and I called them up to ask them about this. The area manager called me back and said it is totally within their right because there's a clause that states that the payment to me is revenue split "... less any sales, use, property taxes and/or license or occupational fees". He said this increase qualifies as "occupational fees". I said the letter sent by CSC clearly indicates that the increase is due to "investments in people, systems, technology and service delivery", and not a fee related to occupying the space. He said... and this totally cracked me up... "these fees are incurred because we have our equipment in your laundry room." So, in conclusion, his point is -- Because CSC / Coinmach is in the business of occupying people's laundry rooms and putting equipment in them, any and all business expense qualifies as "occupational fees", and they can increase the fees unilaterally, in any amount, per the agreement. This argument is just so outrageous that I'm frankly surprised their lawyers bought off on it.
I've led Strategic Sourcing groups for two Fortune 500 companies before, where my sole job was to negotiate contracts with suppliers and service providers and draft contracts with our corporate legal teams, ranging in amounts of up to tens of millions of dollars. So while I'm not a lawyer, I'm no stranger to contract terms. From my experience, I also know that the sales managers have zero power to change their legal stance, so it was pointless to argue with him. Only their lawyers and senior management can change the terms on something that applies to all their customers. They have a team of highly-paid lawyers, I have logic. It's a textbook case of David vs. Goliath, but I'm willing to give it a try. I've already served them a notice of breach of contract and my intent to terminate, we'll see where we go from here. Depending on their response, I may start an online petition with my fellow investors, all of their customers. The petition may help me push back on this increase, and all other investors can then use this ruling to either terminate the contract with them to go with someone else, or at least block the increase in fee. Anyone else interested?