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Comment on Rider for central station dealer agreement
October 6, 2020
Comment on Rider for central station dealer agreement from article on September 30, 2020
            In response to Anonymous about the central station agreement given to him stating,
    “SECURITY INTEREST : In order to secure all indebtedness or liability of DEALER to CS, DEALER hereby grants and conveys to CS a security interest in, and mortgages to CS all of DEALER’s equipment, inventory and proceeds thereof, accounts receivables, SUBSCRIBER contracts and cash on hand. CS is authorized to execute and file a UCC-1 statement. DEALER assigns to CS all SUBSCRIBERS’ recurring revenue payable to DEALER which DEALER agrees to collect and treat as trust funds to be turned over to CS for the payment of all obligations owed by DEALER to CS.”              
            RUN AWAY as fast as you can.  
            Also if there is a provision for first right of refusal – RUN AWAY
            Here at USA we don’t have these provisions.  Never have and never will
Bart A. Didden, President
U.S.A. Central Station Alarm Corp.
Port Chester, NY
Milford, CT
St. Paul, MN
Pasco, WA
            The Security Interest does seem harsh, but it’s appropriate in some deals because the Central Station has made a significant investment in the Dealer and has a right to feel secure in the relationship.  So it is appropriate when the Central Station has a vested interest, which can arise by extending a forgivable loan, extending free monitoring for a number of months or permitting a dealer to fall behind in payment.  
            A Central Station who offers none of that and even requires the dealer to pay for set-up charges, and who is steadfast requiring the dealer to pay in advance of monitoring services, should have no need for a Security Interest or some of the other provisions commonly found in a dealer agreement.
            So the Security Interest is not necessarily a provision that should cause the dealer to look elsewhere for a central station.
            The First Right of Refusal, which you mention, is another matter.  This gives the Central Station the right to purchase the dealer’s contracts and accounts before they are sold to anyone else.  To make it worse, there could be a “call” option whereby the Central Station could require the dealer to sell and transfer the accounts to the Central Station.  The reverse, by the way, is a “put” whereby the dealer can require the Central Station to buy the accounts.  There would have to be a set price based on a calculation or formula.  I can only think of one justification for the First Right of Refusal and that is when the Central Station essentially built the dealer; the dealer owes its existence and success to the Central Station.  That’s not you?  Then the First Right of Refusal doesn’t belong in the dealer agreement you are asked to sign.
            Dealers should be extremely careful about signing a Dealer Agreement and should seek counsel, especially if the dealer doesn’t have the expertise to know what is, and isn’t, appropriate for the deal, and also if the dealer doesn’t even have the patience to read the “fine print” of the Dealer Agreement.  Do you need to read and be careful about signing a Kirschenbaum Contract ™ Dealer Agreement?  Yes, you do.  Do you need to read and be careful about signing a Dealer Agreement prepared by the Central Station and its very own attorney who is other than me?  Damn right you do.  Who knows what crap they included and some of them are unreadable to begin with.
            One added level of protection for the dealer is The Alarm Exchange.  If your central station isn’t on it, RUN.  We’ve tried to list every reputable Central Station, and they know that the “price” for the listing is that they are expected to act reasonably with their dealers; if they don’t, they get de-listed.  So it’s not a warranty, but some level of protection for you, the dealer.  And for Central Stations, if you aren’t prepared to treat dealers fairly you don't belong on The Alarm Exchange and you don’t belong in business either.

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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