What do you think about this lease agreement?

My dad has operated for 30+ years as an o/o having never worked for a big company just always finding a good relationship with a shipper. About 20 yrs ago he bought three more trucks and had them all running with drivers but the overhead and a few bad driver incidents and he went back to one truck with him driving. By the way he runs reefer and hauls regional but moves up and down the east coast as the produce seasons change. In the summer he has to stretch his legs a little and do a little longer runs but a typical year is 80,000 miles.

However with him approaching retirement age he sees that if he wants an income he might need to consider putting someone in a truck and driving. He has a guy that has been asking to work for him for over a year. The guy drives for another company in the area and does a good job. His current company hauls for the same shipper so he already knows the lanes and gets the job done. We know the level of work and are confident that when he is on a load that he could do well.

The concern is that if my dad hires him then my dad will have all of the financial risk of truck payments etc. if the guy decides he doesn't want to work steady. Last fall we did a test and said he could drive the truck for two months. He went out for a few weeks but after he got home there was always a reason he couldn't get back in the truck right away. He had legitimate reasons but that truck payment and insurance payment keeps rolling in no matter what the reason.
So this brings me to the point of the post. This guy still wants to work for my dad and so we are talking about doing a lease agreement. I want to describe some of the general outline then I would like to get your feedback.

First off we want to buy a brand new truck for him to drive. We don't want to be chasing problems on a used truck and after 30 yrs in the business my dad has found new to work best for him. I do his books as well as work for another carrier and have the same opinion for the routes he runs.

Dad would pay for the truck and driver would pay 80% of monthly payment as a lease payment.
driver would pay cost of insurance
driver would pay for fuel (but use dad's fuel program)
driver would pay for lumper.
dad would pay for all maintenance and tires.

Dad would provide working cash during the trips
dad would handle all government filings such as IFTA, IRP, etc.
dad would do all invoicing
dad would do all load finding and dispatching

Dad would front all monies and settle up during driver pay.
would set up a two month escrow/prepayment on truck lease amount.
we have to have a balance in case he decides not to work during a set time so as to cover payments.

Driver has a lot of responsibilities above but we are treating this as the guy going into business for himself; he will be an owner operator just operating under dad's authority and getting dad's services.
Of course with all of that driver expense comes the need to get a hefty payday. We are considering driver getting 85% of the revenue.
main motivation is to keep the truck rolling. We figure the better the payday option for the driver then the more motivated to stay working. Driver can come home when he wants and can turn down loads if he wants. Driver can find his own loads if he wants but not sure that we would do the deal any different for driver found loads.

A quick calculation
Revenue from loads about 225000
Driver gets 191,250
driver pays lease of 28,800
pays fuel 75,000
ins 9,600
lumper 10,000
driver nets 67,820

Dad revenue 33,750
Revenue from lease payment 28,800
total revenue. 62,550
trk payment 36,000
maintenance 5,000
addtnl office exp 2400
dad net. 19150

The revenue from shipper is pretty close based on prior few years business.

What do you think... If you were a driver would you take it. If you were the owner would you put the driver in the truck for this deal.

looking at six month lease to start and go to a year from there.
Driver forfeits one month rent if cancels lease before 6 months.
We aren't sure if driver should get a buy out option on the truck. If we went that route it would be proportion to what the driver has paid plus a premium.
my dad figures if it doesn't work out he can try someone else but if no one works out he will sell his current truck and take over the new one.

What am I forgetting?

 

I am thinking a buyout option needs to be a part of the lease plan. I can see him taking care of the truck either way but the tendency for most would certainly be to take better care of what might be yours one day.

 

Driver can choose to book their own loads separate of owner and can turn down offers available from dispatch. Driver can choose to fuel where ever he wants but discount program only applies to certain locations. We use the NASTEC Fleetone program. Works better than anything else I have seen. But driver doesn't have to fuel at the discount locations they just have to provide fueling records for IFTA Reporting. Driver can work when they want and come home when they want that is why the lease plan is being offered. Because driver can work or not he had has to be responsible for the lease payments. As an employee he would be fired for setting home but as a leased on driver he just has to meet his payment obligations.
My dad is not a fan of the newer trucks that use the special fuel requirements. But seems like everything with decent miles has that stuff so might as well go new. He bought used for 20 years but was always having something worked on. If he didn't understand engines he would have been out of business a long time ago. He still has had issues the last 10 years buying new but mostly warranty work so although you have downtime at least you don't have out of pocket also.

This truck will run a little longer miles than dad's typical runs so we want to keep the wheels rolling so that money is rolling in. Easiest way we see to do that is buying new.

 

I spoke to a guy I know that was in the office at a 100+ truck carrier and he said they did 80% with another 2 percent for maintenance fees. Net of 78% isn't too bad to driver but driver would getting close to what he would make as an employee yet he has risk and responsibilities greater than an employee. I have to give it more thought. What is the right percentage? That is the big question.