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 white list ken@kirschenbaumesq.com ****************************** signing your customer's contract form October 21, 2020 ***************** Webinar: **************** Title: Importance of Sound Financial Management; How to make your company bankable When: November 4, 2020 Time: 12 PM noon ET Presented by: Mitch Reitman Hosted by: Ken Kirschenbaum Who should attend: owners, CFO, general managers Register Here:https://attendee.gotowebinar.com/register/8666979981049202187 *********************** signing your customer's contract form *********************** Ken, I have worked with several customers over the past year who have entered into their customers’ agreements and found out that the RMR is not qualified. We all see these situations, a customer is a property manager, governmental body, or a large corporation and won’t sign the standard agreement, so, you sign their contract and are glad to have the work. The problem is that, not only do these agreements lack the typical protective provisions (Limitation of Liability, Indemnification), they may have other serious infirmities such as lack of assignability (or assignability by the customer), lack of renewal, prohibition against price increases, etc… We even encounter some “contracts” that are nothing more than Purchase Orders. While I can understand that a single installation may generate tens of thousands of dollars in install margin, and $500 or more of RMR, be aware that not only are most customer produced agreements not marketable, they may put you on the wrong end of a law suit. It isn’t unusual for a customer to expect you to assume some liability for an installer who is on the premises installing an alarm, but it is unreasonable for you to assume liability when you are monitoring the fire alarm for $60 a month. If your installers go Curley, Moe, and Larry on you and knock out a window with a ladder, yes, maybe you should step up to the plate. If a central station operator gets the address one digit off and the fire trucks take a minute longer to get there, you shouldn’t be expected to be on the hook for a $20 million office building (especially if you only have a $3 million liability policy). I know that this is easier said than done, but, if you are delivering good service, and the customer likes you, you should have Ken review the Monitoring Agreement. You will be surprised how an attorney who knows the industry can deliver something that limits your liability, while satisfying the customer. If you don’t and you eventually sell, there is a good chance that the Buyer won’t accept that contract. If you sell for 40X and the contract is for $100 per month, that is $4,000 of retirement money that you can kiss goodbye. Mitch Reitman Reitman Consulting Group 817-698-9999 http://www.reitman.us ********************** Response ********************* Good observation and advice. Why do we use contracts in the alarm industry? * to memorialize the agreement bargained by the parties and hope for enforcement * to provide contractual protection from contingencies that would be actionable under common law * to build equity in the business by RMR under contract growth In almost all cases Subscriber forms do not accomplish at least two of the three items above, and like doesn't address all three. While the Subscriber form may have most of the deal concerning the scope of your work and what you'll be paid, that's about all the benefit from the contract you should expect; every other term favors the Subscriber [just as the alarm contract favors the alarm company]. So if the Subscriber contract has scope of work and payment you may end up whole and be pleasantly surprised when the job is done. This can work for installation only, not RMR services. The Subscriber form will not have contractual protection. That means you may have trouble getting or keeping E&O coverage, and you may have trouble finding a central station willing to monitor the account or a subcontractor willing to provide any services for the account. Certainly you won't have the protection if there is a claim and you have to defend without the contractual defenses and you actually did something wrong. Hope your insurance coverage is sufficient to bail you out. Finally, I hope you're making a good buck on the installation and the RMR is profitable, because you haven't added one cent to the value of your business. No alarm company is likely going to buy the account or contract, and if they do, it won't be for top dollar. So at the very least using the Subscriber contract is not giving you the same value as the Standard Form Agreement. I want to raise two related issues: * If you don't have the Standard Form Agreements then you can't expect any subscriber to sign it. Sounds obvious, but you'd be surprised how many alarm companies seem surprised when I say it. You have to start every negotiation with your form contract. if you don't have a form contract or it is so unprofessional that your potential subscriber discards it, then expect to be presented with the subscriber's form contract. If your subscriber always uses its own form you still should present them with your form contract and hope to engage in discussion of why you need your contract form signed. That leads me to the second issue. * Contract negotiations between you and your subscriber will, in most cases, go smoother and be more successful, if you use counsel. The Concierge Program's signature benefit is a Monthly Credit to be used for contract review and negotiation. It's a $250 a month benefit and costs only $145 a month. Yes, it's not worth it if you won't use it. If you won't use it, you're foolish. Maybe not as foolish not to use the up to date Standard Form Agreements, but foolish nonetheless. ****************** To order up to dateStandard Form 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. *********************** NOTICE: You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles *********************** THE ALARM EXCHANGE
This area is reserved for alarm classifieds, alarm company announcements, solicitations, offers, etc. There is no charge to post a listing here.Include your contact information, phone, email and web site. If you would like to submit a post, please send an email to ken@kirschenbaumesq.com. To create a reciprocal link to our website, click here. ************************************************ 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
