Follow up on Licensing and subcontractors October 27, 2026

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Follow up on Licensing and subcontractors
October 27, 2026
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Private meetings at ISC EAST
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   To arrange a private meeting with K&K and staff at ISC East on November 4 or 5 please contact Kathleen Lampert at 516 747 6700 x 319 or KLampert@Kirschenbaumesq.com or Stacy Spector,Esq at 516 747 6700 x 304 or SSpector@Kirschenbaumesq.com. We are planning half hour appointments between 10:30 and 3:30 on November 4 and 5. If you think you need more time let us know. We look forward to seeing you at ISC; meetings will be outside the hall at the food court area.
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IT’S PARTY TIME - SAVE THE DATES - Two parties
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   The annual K&K party in New York will be on December 1, 2026 in Old Westbury, NY.
   This year we are also starting what we hope will become tradition, a holiday party in Boca Raton, Florida, which will be on December 10, 2026.
   To RSVP for either party notify Kathleen Lampert at 516 747 6700 x 319 or KLampert@Kirschenbaumesq.com, or Stacy Spector, Esq at 516 747 6700 x 304 or SSpector@Kirschenbaumesq.com. RSVP only if coming and let us know if you will be bringing someone with you.
Be sure to RSVP asap so we can plan, and a gate pass will be sent for the Florida party. Parties will be 6:30 to 9:30 pm, casual dress. Hope to see all of you at one or both parties.
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follow up on Licensing and subcontractors from article on October 1, 2026
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Ken,
   Your licensing email today raised an issue that has come up in several recent M&A discussions with private equity firms and PE-backed security platforms. Several I have spoken with have suggested a platform can expand quickly into new states and pursue customers for regulated services while avoiding local licensing requirements because its model subcontracts the fieldwork to a licensed local provider.
   That does not match my understanding of how most state licensing requirements work. In many states, the licensing obligation often extends beyond the individual performing the installation. Depending on the jurisdiction, it can apply to the entity selling, contracting, servicing, monitoring, or presenting itself as the provider of regulated work.
   This distinction matters in the PE roll-up model. Many firms seem to envision a centralized platform that manages the brand, customer relationships, pricing, contracts, billing, dispatch, and national account management, while using subcontractors in states where the platform is not licensed. In several conversations, licensing has been treated more as a labor issue than as a legal requirement for the contracting entity.
   For licensed operators, this creates a significant competitive issue.
   I have invested years of my own time and significant resources building and maintaining our licensing infrastructure. This includes examinations, qualifiers, applications, renewals, continuing education, insurance, employee registrations, administrative support, and the ongoing cost of compliance across multiple jurisdictions. I have always seen this as the legal cost of entering and operating in a regulated market.
   If an unlicensed PE-backed platform can enter the same market, pursue the same customers, and contract for regulated work by relying on a subcontractor’s license, it gains a significant cost and speed advantage over companies that have complied with licensing requirements.
   Florida makes this especially interesting because the law addresses unlicensed contracting broadly and also makes contracts entered into by an unlicensed contractor unenforceable by that contractor. Texas likewise regulates entities that act as, or offer to act as, alarm systems companies, and Alabama imposes licensing requirements on companies that sell, install, service, maintain, or monitor regulated systems.
   This raises a question that is important for the industry, especially given the level of private equity activity in the security and fire markets.
   If you were advising a PE firm that wanted to build a multi-state or national alarm and fire platform through acquisitions, how would you tell them to structure their licensing strategy before expansion?
   More specifically, when does the PE-backed platform or contracting entity itself need to be licensed, and when, if ever, is it sufficient to rely on a licensed subcontractor or acquired operating company?
   I am also interested in the other side of the issue. If a licensed company loses a customer to an unlicensed competitor that was not legally authorized to contract for the work, could that licensing violation support a civil claim such as tortious interference or another unfair competition theory?
   I recognize that ordinary competition is generally privileged. The question is whether that privilege changes when a competitor knowingly avoids a licensing regime that others have spent significant time and money to comply with.
   Put simply, is the licensed company’s remedy limited to reporting the violation to the licensing authority, or can unlawful competition create a private cause of action when it leads to the loss of a customer or business opportunity?
   Thank you for all you do for our industry.
Shane Sullivan
Solid Security
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Response
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   You’re on your way to an important meeting. You get in a car accident and it’s entirely the unlicensed driver’s fault; you’re late and lose the deal. Can you sue and win? For sure not in NY, and not anywhere else either. That unlicensed driver might get a ticket, get arrested, or maybe even get deported, but you have no private action for missing your appointment. Of course, you can sue for your car and personal injury damages and hope there is some insurance on the vehicle or that your uninsured or underinsured vehicle protection is sufficient.
   Back to the alarm industry, if you contract to perform or do perform alarm business activity, however that is described in the state statute, you must have your own license. There is no sharing and there is no being covered by a subcontractor or by the contracting company covering the subcontractor.
   That applies to PE and public companies just as it does to a one-person operation working out of a truck. I can’t account for why a company would opt to not get licensed, or why it doesn’t come to K&K for advice [almost all the world’s largest companies have, BTW] but that doesn’t change the fact that they need to be licensed if the license is required for what they are doing.
   You can and should report them to the licensing agency and it would not be tortious interference to let the potential customer know they are not licensed; you just better be right about that.
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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