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More on local competitor stealing accounts
July 10,  2024
More on local competitor stealing accounts from article on June 7, 2024
         I saw the additional posts on “competitors” stealing accounts in you June 7, 2024 posts.  I think that it is important to clarify the difference between a Non-Compete and a Non-Solicit.  Most experienced buyers of alarm companies include a Non-Solicit, Non-Acceptance provision in their Purchase Agreements.  These are different than Non-Compete provisions.  The spirit of a Non-Solicit is that the Seller sold the Monitoring Agreements to the Buyer for a significant price and the Buyer has a right to these customers.  I agree with those who say that they have a right to be employed, I don’t agree with those who say that they have a right to steal back customers.
          SK asked Does the FTC Ruling include non competes between dealers and contractors?   It appears that he was asking that if he installed a system as an Independent Contractor would he be prohibited from soliciting that customer when they were “out of contract.”  I have been involved in several law suits regarding this type of situation and the “dealer” took the position that the “contractor” (or salesperson, or installer, or employee) used a customer list to approach these accounts, shortly before their renewal date, and induce them to sign with another company.  The “dealer” took the position that the customer list was a Trade Secret and the “contractor” shouldn’t have used it to solicit customers.  Also, as we all know, well written Monitoring Agreements  automatically renew, so the customer is still under contract at the end of the initial term, so they wouldn’t have been “out of contract” except for the interference by the “contractor”.  I was involved because the Alarm Company needed a valuation to set damages for use in the trial and the judgment.  This type of behavior isn’t Competition it is interference. 
            Again, your advice was spot on.  Don’t DIY your contract and don’t “rip it off” from another company.  Like it or not, customer RMR is worth north of $1,000 an account (much more if it includes interactive services, inspection, service, etc…).   Losing one account because of a poorly written Monitoring Agreement can easily exceed the cost of purchasing your own Kirschenbaum agreements.   Losing 100 or so can tank your business. 
 Mitch Reitman 
 817 698 9999 XT 101
Reitman Consulting Group
            Non-solicit and non-compete do have overlapping effect but they are different provisions and should be separately drafted within the same agreement.  They should also not be confused because the restriction is different.  Non-solicit can service the customer if the customer initiates the contact.  Non-compete cannot service the customer no matter who initiates the contact. 
            Any restrictive agreement is going to receive careful and close scrutiny by a court who will be reluctant to enforce the restriction.  The FTC proposed ban, if it ever goes into effect [and I have my doubts it ever will] further restricts the non-compete and likely to cause courts to take a more liberal approach to enforcing the provisions. 
Clarity in the written agreement is essential.  Is your agreement clear?  I have a pretty simple test for clarity.  Do you understand what the wording in the document?  Do you have any doubt what it means?  Do you think it could possibly be interpreted differently?  You are the jury; so is whoever else you ask to read the document.  If there is any disagreement; if you need a lawyer to explain what it means, it’s not clear enough.  That’s my test. 
Kirschenbaum Contracts are written with clarity.  If you think you don’t understand it the reason is because you haven’t read it or you simply don’t like it; there can be no mistake what it says and what it means.  That’s what you want in your alarm contract and every other document you sign and agree to.

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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