KEN KIRSCHENBAUM, ESQ ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE You can read all of our articles on our website. Having trouble getting our emails? Change your spam controls and whitelist ken@kirschenbaumesq.com ****************************** More on local competitor stealing accounts July 10, 2024 *********************** More on local competitor stealing accounts from article on June 7, 2024 *********************** Ken, I saw the additional posts on “competitors” stealing accounts in you June 7, 2024 posts. I think that it is important to clarify the difference between a Non-Compete and a Non-Solicit. Most experienced buyers of alarm companies include a Non-Solicit, Non-Acceptance provision in their Purchase Agreements. These are different than Non-Compete provisions. The spirit of a Non-Solicit is that the Seller sold the Monitoring Agreements to the Buyer for a significant price and the Buyer has a right to these customers. I agree with those who say that they have a right to be employed, I don’t agree with those who say that they have a right to steal back customers. SK asked Does the FTC Ruling include non competes between dealers and contractors? It appears that he was asking that if he installed a system as an Independent Contractor would he be prohibited from soliciting that customer when they were “out of contract.” I have been involved in several law suits regarding this type of situation and the “dealer” took the position that the “contractor” (or salesperson, or installer, or employee) used a customer list to approach these accounts, shortly before their renewal date, and induce them to sign with another company. The “dealer” took the position that the customer list was a Trade Secret and the “contractor” shouldn’t have used it to solicit customers. Also, as we all know, well written Monitoring Agreements automatically renew, so the customer is still under contract at the end of the initial term, so they wouldn’t have been “out of contract” except for the interference by the “contractor”. I was involved because the Alarm Company needed a valuation to set damages for use in the trial and the judgment. This type of behavior isn’t Competition it is interference. Again, your advice was spot on. Don’t DIY your contract and don’t “rip it off” from another company. Like it or not, customer RMR is worth north of $1,000 an account (much more if it includes interactive services, inspection, service, etc…). Losing one account because of a poorly written Monitoring Agreement can easily exceed the cost of purchasing your own Kirschenbaum agreements. Losing 100 or so can tank your business. Mitch Reitman 817 698 9999 XT 101 Reitman Consulting Group http://www.reitman.us ************************* Response ************************* Non-solicit and non-compete do have overlapping effect but they are different provisions and should be separately drafted within the same agreement. They should also not be confused because the restriction is different. Non-solicit can service the customer if the customer initiates the contact. Non-compete cannot service the customer no matter who initiates the contact. Any restrictive agreement is going to receive careful and close scrutiny by a court who will be reluctant to enforce the restriction. The FTC proposed ban, if it ever goes into effect [and I have my doubts it ever will] further restricts the non-compete and likely to cause courts to take a more liberal approach to enforcing the provisions. Clarity in the written agreement is essential. Is your agreement clear? I have a pretty simple test for clarity. Do you understand what the wording in the document? Do you have any doubt what it means? Do you think it could possibly be interpreted differently? You are the jury; so is whoever else you ask to read the document. If there is any disagreement; if you need a lawyer to explain what it means, it’s not clear enough. That’s my test. Kirschenbaum Contracts are written with clarity. If you think you don’t understand it the reason is because you haven’t read it or you simply don’t like it; there can be no mistake what it says and what it means. That’s what you want in your alarm contract and every other document you sign and agree to. ***************************** STANDARD FORMS Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com *************************** CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304. *********************** ALARM ARTICLES: You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles updated daily ******************** THE ALARM EXCHANGE - the alarm industries leading classified and business exchange - updated daily ************************* Wondering how much your alarm company is worth? Click here: https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth ****************************** Getting on our Email List / Email Articles archived: Many of you are forwarding these emails to friends or asking that others be added to the list. Sign up for our daily newsletter here: Sign Up. You can read articles and order alarm contracts on our web site www.alarmcontracts.com ************************** Ken Kirschenbaum,Esq Kirschenbaum & Kirschenbaum PC Attorneys at Law 200 Garden City Plaza Garden City, NY 11530 516 747 6700 x 301 ken@kirschenbaumesq.com www.KirschenbaumEsq.com
