KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comment on Dealer providing monitoring for another dealer's customers / common license misconception
January 18,  2025
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Comment on Dealer providing monitoring for another dealer's customers from article on January 2, 2025 / common license misconception
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Ken,
     One explanation could be that the installing company is not properly licensed.
    This should not be a problem for "Mike" so long as Mike's company contracts directly with and is paid by the end user, and does not do anything that could be construed as aiding an unlicensed alarm company.  Free accounts for Mike! 
Anon in Calif
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Response
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          You may recall that the original article was question from a dealer whose buddy wasn’t licensed [at least to monitor, as I recall].  So the buddy did the installation and then turned the customer over to the other alarm dealer who entered into a monitoring agreement. 
          The company entering into the monitoring agreement did nothing wrong, as it is licensed to provide the service it contracted to provide. 
          There is a persistent and common misconception about licensing.  Simply put, you cannot enter into a contract to provide a service that you are not licensed to provide; engaging someone who is licensed as your subcontractor doesn’t work unless you are a General Contractor, and you’re probably not [though it may be easier to get that license than the alarm license].  Take Texas as an example:  Texas does not require general contractors to be licensed or bonded, but they are required to be a state-registered business. 
          In states requiring a license you cannot circumvent the license law by engaging a licensed subcontractor.  You can of course refer the customer to the licensed subcontractor, but then that subcontractor will have to enter into a contract with the customer directly, basically cutting you out.  You may be able to get a referral fee, but be careful of running afoul of alarm license requirements for sales people.
          This issue comes up when alarm dealers have customers with multistate operations and locations.  They want to service their customer but getting a license for one customer at one location may not make sense economically.  You choice is take a chance and do the work without the license or refer it out, or get the license.  Texas does not require general contractors to be licensed or bonded, but they are required to be a state-registered business. K&K’s License Coordinator Eileen Wagda can assist with finding you are license qualifier. Reach her at 516 747 6700 x 312.  You can also find license holders listed on The Alarm Exchange.
          You should be mindful that the customer with multistate operations may be concerned with legal requirements when dealing with contractors.  You may have represented to the customer that you are licensed to perform your services.  You aren’t going to want to screw up your relationship with this customer over one installation or even a bunch of installations in a state you aren’t licensed.
          This issue also comes up with alarm dealers who want to monitor nationwide; licenses are required in at least 20 states.  Again you have choices:  get licensed, take your chances not getting licensed. 
          The discussion of whether alarm companies should be licensed is a ship that sailed long ago, and of course there are good reasons to require licensing in most circumstances.  Companies that do comply and get licensed are naturally incensed by competition from unlicensed companies, many of whom are ones that give the industry a black mark.  Licensing agencies have become more active in insuring license compliance.  If you have issues with the licensing agency you may want your first call to be to K&K for assistance how to best handle the investigation or complaint [if it reached that level].  Calling us after the “trial” or even after you’ve responded on your own [thinking you can handle it – you can’t, by the way, at least not as K&K would] is going to be too little too late. Treat license investigations and complaints as if your livelihood depended on it, because it does.
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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