KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comment on Do DIY techs need license  / RMR multiples - does police response have bearing on the multiple / Schedule Free meeting at ISC
February 12, 2020
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Schedule Free Private meeting while at ISC with Ken Kirschenbaum
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Round Table Discussions while at ISC, at Palazzo Hotel.  Free to participate.  Space very limited so book now.  Call Stacy Spector,Esq at 516 747 6700 x 304 to reserve your seat.  [other topics may be announced]
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Round Table:  March 18, 2020 at 11 AM.  Join Morgan Hertel, VP of Technology and Innovation, Rapid Response Monitoring and Ken Kirschenbaum for a round table discussion on ​current state of monitoring including technology and well as outside influencers like minimum wages and privacy laws. 
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Round Table:  March 18, 2020 at 1 PM.  Join Mitch Reitman and Ken Kirschenbaum for a round table discussion on Taxes and Corporate issues for alarm companies relevant when selling or buying accounts. 
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Round Table:  March 18, 2020 at 2 PM.  Join Ron Davis and Ken Kirschenbaum for a round table discussion on Selling or buying alarm accounts and RMR issues.
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Round Table:  March 19, 2020 at 1 PM.  Join Sharon Elder, VP Sales, USA Central Station and Ken Kirschenbaum for a round table discussion on the value of quality video contracts and services
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Round Table:  March 19, 2020 at 3 PM.  Join Bart Didden, Executive Claims Administrator, Security America and Ken Kirschenbaum for a round table discussion on ​Errors and Omissions Insurance Claims and Risk Management
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Comment on Do DIY techs need license from January 18, 2020 and February 8, 2020 articles
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Ken:
            We’d like to address your response to the Jan. 18 question [and Feb 8] about DIY techs needing a license. You said,
     “It’s not the professional monitoring that is causing you to be licensed, it’s sending a technician into the home that requires the license.”
       While this is true in many states, it is not only that in Illinois.
 NOTE: The cited section is from the Rules at Section 1240.535, not the Alarm Contractor licensure act.
http://www.ilga.gov/commission/jcar/admincode/068/068012400F05350R.html
    “Private alarm contractors who provide monitoring services shall maintain a separate roster of the names of all licensed agencies and/or individuals, including license number, from whom they accept monitoring contracts or assignments.  The roster shall be made available to the Division upon 24 hours notice.  It shall be considered unprofessional conduct, subject to discipline by the Division, for a licensed alarm contractor or agency to accept monitoring contracts or assignments from an unlicensed entity.”
   Our best,
 Board of Directors
Illinois Electronic Security Association
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Response
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            This addresses a different issue: a central station accepting monitoring from an unlicensed company.  In several states, Illinois included, it’s actually illegal for the central station to accept monitoring from an unlicensed [alarm] company.  This makes it quite clear that not only must the central station be licensed but its dealers must also be licensed.  I get asked that almost once a month.  In most states it’s only the unlicensed dealer that could get in trouble, but as in Illinois, there are several states where its illegal for the central station to accept the monitoring.   
            The original question was whether a company selling DIY equipment, but providing tech support to help with the installation, needed to license the techs.  The answer is that in any state that requires an alarm tech to be licensed, certified or registered, the DIY tech would need to be licensed, etc.  I offered as some rationale that the employees were entering homes and therefore the state has a real interest in the qualifications of these individuals.
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More on RMR multiples from January 29, 2020 article – does police response have bearing on the multiple?
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Ken
            Dennis Riley, referenced “alarm verification” as one of the tools for retaining/adding market value for RMR.  We agree and add more observations.
            When we interact with RMR investors/lenders we suggest they include another important issue to their due-diligence check list :::  Policy, Ordinance and Practices of local municipal police or sheriff related to calls from private RMR monitoring firms for response to private property alarm systems. Slow or no priority site response suggests higher attrition (lower RMR value); and higher priority site-response suggests less customer attrition (higher RMR value).  Every Muni can have a different response priority.  Which means investors/lenders should not offer a quick “multiple” to the entire block of contracts (if spread across several Munis), without the due diligence noted above. Most monitoring facilities have already upgraded to interactive-remote-witness for high priority response, but of no value unless the customer site is compatible.  Most customer sites are NOT remote-witness compatible, thus lower multiples, and going lower.
Lee Jones
Support Services Group
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Response
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            This raises an interesting issue:  Are multiples influenced by how police respond to the subscribers alarms?  Lee suggests just that, and that the multiple will be lower in municipalities where there is no or delayed or low priority police response.  I suppose the underlying theory is that as police response time has a direct correlation to the value of the alarm system, and that affects the value of the subscriber contract.  Thus, the same contract, same subscriber, same RMR, is worth less in an area where the police assign low priority or no response to intrusion alarms unless the alarm is verified, confirmed.  Keep in mind that the All in One Agreements specifically disclaim any control over or effectiveness of police or fire department response.
            I confess that when I value alarm company accounts [https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth]
I don’t check police response policies.  I have not had any experience where the multiple was affected by the police policies.  But, I do think that verified alarms are more reliable than non-verified alarms.  I don’t opine on which verification is more effective; ECV, video, runner service or all combined.  We do know that verification reduces false alarms.  
            Comments from the brokers and buyers are welcome.
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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