Food Truck Leasing in Australia

With the rise of the sharing economy, more and more people are looking to lease their personal or business assets for short-term hire. This has become widely adopted with two-sided marketplaces for car sharing, caravan sharing, and equipment dry hire. So why is it still so hard to set up a secure food truck leasing agreement?

Firstly, a food truck or coffee van usually comes with complexity. Not only is there expensive equipment involved, but often a caravan or vehicle as well. Secondly, the person hiring the vehicle is often new to the industry and inexperienced, which carries a higher risk. For these reasons, a large ecosystem of leasing options doesn’t exist yet, and many insurance companies are hesitant to underwrite suitable policies for the hirer.

The “Lease to Own” Alternative

Some manufacturers and finance brokers have circumnavigated this by implementing a “lease to own” model. However, these usually involve high fees and “balloon payments,” making them unsuitable for new vendors looking for flexibility.

Why Lease Your Asset?

I’ve seen an increasing number of vendors wanting to lease their vehicles for several reasons:

• Taking a break (holiday or illness).
• Seasonal usage (not using it all year round).
• Maternity or paternity leave.
• Generating passive income.

Personally, I felt my coffee van was sitting underutilised for part of the year. I wanted to give other vendors the opportunity to test their concepts with my equipment. Here’s how I did it safely and securely.

10 Steps to Successfully Lease Your Food Truck or Coffee Van

1. Vet the Hirer

• Background Check: Check their Facebook profile and ask probing questions about their business intentions to gauge professionalism.
• Experience: Prefer hirers with prior hospitality experience. Ask for references or examples of past operations.
• Financial Stability: Verify they can make regular payments. Look for red flags, such as requests for smaller, unconventional payment cycles.

2. Discuss Needs and Expectations

• Minimum Term: I recommend at least a 3-month lease. The admin involved is high, and it takes an emerging vendor about 90 days to find their feet.
• Brand Separation: Do not include the usage of your brand. The hirer must source their own ABN, Council registration, and trading permits.
• Inspections: Unless you are in the same LGA, the hirer will likely need a fresh council inspection before they can trade.

3. Find the Right Insurer

Many insurers avoid this niche. I worked with a specialist broker (City Rural) to create a policy that included a “hire agreement.”

• Find a Niche Provider: Look for specialist brokers via the Insurance Council of Australia.
• The Hire Clause: In my case, the agreement doubled the excess for hire-related claims, which I then passed on to the hirer in the contract.
• Risk Mitigation: Show the insurer your contract templates and vetting process to prove you are managing the risk.
• Stay Transparent: Notify your insurer whenever a new lease starts with the hirer’s ID and contact info.

IMPORTANT: A hire agreement covers the equipment/vehicle, but it does NOT cover Public Liability. The hirer must take out their own Public Liability insurance.

4. Create a “Hire Agreement” Contract

Use platforms like Lawpath or SprintLaw to find a “Dry Hire Agreement” template. Ensure it includes:

• Owner Obligations: Handover details, registration maintenance, etc.
• Hirer Obligations: Restrictions on modifications and maintenance requirements.
• The Schedule: Detailed equipment list, hire fees, bond amount, and specific conditions (e.g., descaling the coffee machine).

5. Create a Detailed Handover Document

This is your checklist for the day of pickup. Include:

• Core Processes: Filling/emptying water tanks, generator operation, and machine startups.
• Vehicle Logistics: Tow bar hitching and using chocks.
• Training: Clearly define what specialist knowledge (like dialing in a grinder) you are providing.

6. Conduct the Handover

• Don’t Rush: Set aside at least an hour. Both parties should sign the document to acknowledge the training was sufficient.
• Evidence: Take photos/videos and email them to the hirer immediately to create a timestamped record of the vehicle’s condition.

7. Check-in and Support

Offer to be available for ad-hoc questions. Most “technical issues” in the first few weeks are simply user errors.

8. Conduct Hand-back & Return Bond

When the lease ends, repeat the inspection process. If there are cleaning issues or breakages, note them on the document and deduct the costs from the bond before returning the balance.

Pro Tips for Success

• Install a GPS: Ensure the hirer knows it is there as part of the agreement.
• De-brand the Vehicle: Remove your signage to protect your brand reputation.

Conclusion

Leasing out your food truck can be a lucrative way to earn extra income, but you must protect your assets. By vetting lessees, using a solid contract, and ensuring you have the right insurance “add-ons,” you can create a win-win situation for yourself and an aspiring entrepreneur.