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REMEDY ON DEFAULT FOR RESIDENTIAL SUBSCRIBER
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Ken,
I have a subscriber that has requested to terminate monitoring. The agreement was signed to years ago and has a 36 month term. He is stating that he will not pay the remainder of the monitoring agreement. I want to verify under section 25, Legal Action on the Residential All in One, that he is liable for payment on the remainder of the agreement. Would he be considered in default of payment since he has not finished his initial term of the agreement? And would the language in that same paragraph also hold true about termination or subscriber breach and being responsible for 80% of the communication system?
I need clarification because his monitoring charge gets drafted directly from his checking account and he stated that he doesn't want his account debited for any further charges.
If used in the forum please list as anonymous.
Thank you,
anon
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RESPONSE
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You are reading the provision correctly. The term of the agreement is 36 months [which you changed because we sent it to you with 60 months in the printed form]. If the subscriber is canceling without justification [which means you are in breach of the contract] then the subscriber will be liable for the balance of the contract. The contract has a liquidated damage provision requiring the subscriber to pay 80% of the balance due on the contract. Your All in One also provides the communication system remains your property and if not returned or if you deem it sold to the subscriber.
Note that the newer version of the Residential All in One does not reserve ownership in the "communication system" so there would be no add-on in the event of a subscriber default. The trade off is that the alarm company owns all of the programming and codes. This was changed because the communication systems are typically [if not always] contained within the panel and can't be removed. You can however deactivate the communication once the contract ends.
Regarding the ACH automatic payment from the subscriber's checking account I think you should terminate that process. More than likely the subscriber will notify the bank to stop paying anyway. Continued auto payment may result in a complaint to a consumer agency. Even if you you have done everything right you don't need to hear from a regulatory consumer agency.
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VALUATION OF ALARM COMPANY
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Ken,
You did a complete evaluation of a company that I am part owner of. If I were to sell my ownership of this company to the remaining partners how does the RMR affect the value of my shares? I planned on using the earnings multiplier of 5 off of our P&L sheet but am not sure how to factor in the RMR value after that. Is it a 1:1 ration or a percentage? For example (not real $$) if the company’s net profit was say $100,000 for 2015 with a multiplier of 5 = $500,000 if I held ½ of the shares the value w/o RMR my share ownership would be worth $250,000. How do I factor in the RMR (real $$ above) to establish my real share value?
name withheld
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Alarm companies are usually valued using a formula of aggregate Recurring Monthly Revenue times a multiple. That's how I evaluated your company when you submitted the request on WhatsMyAlarmCompanyWorth.com. You are coming up with another number because you are using my evaluation and then adding an EBITDA calculation. You get one or the other, not both.
Brokers experienced in the alarm industry [and there are a number of them on The Alarm Exchange] are very knowledgeable when it comes to coming to a realistic value of your company or its assets. They are welcome to comment on the above.
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