How do I check a towing company’s motor club contracts before buying?

Ask for every agreement with a motor club or similar referral source, plus the current rate sheets. Read for the payment per call, performance standards, the area covered, and how fast the club can end or change the terms. Many allow it at short notice, so the income may be less secure than it looks.

Ask the club directly, with the seller’s agreement, whether it will keep the contract with a new owner. Some need to approve and re-qualify the operator, the trucks and the insurance. Your lawyer can say what the agreement requires.

Then see how the company performs against the club’s expectations. Ask for scores, complaints and any warnings. A good standing is part of what you are buying. Look at the equipment and drivers. Confirm which trucks and licensed drivers the contracts depend on, who owns them, and what the carriers’ rules require of your operation. Check how much work also comes from police rotations, private accounts and repeat customers, since spreading the sources reduces the risk. Ask about the dispatch tools and call records too. They show how many calls the company accepts, how many it misses and how quickly it responds. Clubs watch these closely, so the numbers affect whether a contract continues under your ownership.

Key takeaways

• Read the termination and transfer terms in each agreement.
• Ask the club whether it would keep the contract with you.
• Check how much income comes from other sources.