This is the sixth article in the series on central station selection considerations.

    This article discusses the fifth consideration in selecting a central station and deals with contractual issues.

    Not all central stations use the same contracts, and in fact some may not use any contracts. You should read and understand what your central station s asking you to agree with.

    First of all, let me comment on one of the more common misconceptions, and that is the monitoring contract itself. A smart central station doing third party wholesale monitoring would be wise to use three party contracts, signed by the dealer, subscriber and the central station. This monitoring contract is for the benefit of the central station, not the dealer. Dealers who use the central station's monitoring contract as the only monitoring contract are making a huge mistake, one that will cost them significantly if there is a loss and when they go to sell their subscriber accounts. Dealers need their own monitoring contract in addition to whatever monitoring contract the central station requires.

    The reason for this is that the central station's contract is designed to protect the central station, rarely the dealer, usually have no monetary provision, may not have a term provision, cannot be used by the dealer as a salable and transferable contract, and I could go on and on. Dealers, get your own monitoring contract [www.alarmcontracts.com].

You may also be asked to sign what I call an Installer Contract. This is a contract between you and the central station. It might provide for what rates you will be paying, the minimum number of accounts you need to maintain, the minimum length of time you must leave some or all of your accounts at the central station, and it may also contain some provisions that you need to understand, such as an indemnity provision and a first right of refusal if you want to sell your accounts. While I am not necessarily adverse to such provisions I do think that a dealer should understand what it is agreeing to, and the consequences. This should be an important consideration when selecting a central station.

    The indemnity provision is exactly what it sounds like, similar to the one hopefully in your subscriber contracts; it obliges you to defend actions against the central station and pay damages that the central station incurs. It can be broadly worded, or narrowly tailored; it can be full or partial; and it can cover counsel fees or not. If you do agree to indemnify the central station make sure that your errors and omissions insurance company will issue you an endorsement for contractual indemnity covering that contract relationship. Using the same carrier as the central station may help.

    The right of first refusal is something you may give little thought to until you try and sell your subscribers and find out that you can't, at least until you give the central station the right to either match the offer that you have, or, believe it or not, exercise its option to purchase at some prearranged price or formula, which could be and probably is much lower than the offer you have.

    So as you can see, the contracts you will be asked to sign are another important consider when selecting the central station.