getting new contracts signed
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Ken,
You keep mentioning getting new contracts signed as each contract’s original term expires. I don’t know about anyone else, but if we had to generate new contracts for each client, every two years (which is our original term), it would be a nightmare. We have gone to using a 1 year roll over and find with the majority of our clients this is acceptable. We struggle enough with the initial paperwork --- getting a Purchase Agreement, Monitoring Agreement, Responsible Party form, city permit information --- and making sure client’s don’t try and strike out sections, etc. --- that the rollover has been a saving grace. In my reality my time is better spent building the company to ensure we are here long term for our clients. Hopefully California will not change regarding rollovers.
Regards,
Colette M. Came
CAME SECURITY ALARMS
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Response
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Of course getting new contracts signed is time consuming and I can see how you would think it something to be avoided. You're wrong. Initially I note that you use two year term contracts. The Standard Form contracts have a 5 year term for residential contracts and a 10 year term for commercial contracts. I suspect that most subscribers will sign the form with the printed term and those that won't, well you can always change the term by making a hand written modification to the form. I do agree with you that getting a new contract signed every 2 years would be burdensome, but every 5 years is more reasonable.
Your resistance to getting new contracts signed sounds like you would prefer not bothering to think about getting your subscriber's systems updated or supplemented, rather focusing your time on getting new subscribers. Seems to me that your existing subscriber base is the perfect place to start periodically to try and update systems. New technology is coming out all the time and this affords great opportunity to offer your subscribers more equipment, more services and increase your RMR.
As far as relying upon automatic renewal, I believe that becomes riskier each year because you don't know when your jurisdiction is going to impose restrictions on renewal. Since it's likely that new auto renewal laws will except month to month renewals the Standard Form Contracts provide for month to month renewal unless a state statute expressly permits a longer period. See post below for timely comment. Check for automatic renewal laws here: http://www.kirschenbaumesq.com/autorenewal.htm.
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CT considering automatic renewal statute
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Dear Ken
With regard to Dominic Prete's concern......Connecticut currently has a Raised Bill # 316 regarding contract renewal. If passed without modification by the current legislature, it would become effective October 1, 2012.
The Raised Bill covers a number of concerns regarding unsolicited services, trial offers and renewal of any ongoing contract exceeding 180 days. If any contract contains an automatic renewal of more than 31 days, the customer must be notified in a specific manner, within a specific time, that they may cancel the agreement and the manner of cancellation.
Respectfully,
John W. Yusza, Jr., President
Monitor Controls, Inc.
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new occupant won't sign contract
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Question
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Hi Ken,
We have a customer who we got from a former owner of the property, does not want to sign a new contract in May of this year. Are we obligated to continue monitoring until they get a new company? It is a residential account. What if they send us a check for the yearly monitoring. Should we send it back?
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Answer
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Your residential subscriber sold the home and instead of making proper arrangements for the assignment of their alarm contract with you, or getting the new owner to sign a new contract, they just left. You can sue them for breach if they don't pay you what's owed on the contract.
You should not provide any services to the new owner without a contract. You should not accept their money without a signed contract. This one account is not important enough to worry about. Somehow it's always the one pain in the neck account that didn't sign a contract that has a loss and becomes a problem later. Not worth it.
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how to value non RMR contracts
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Ken,
As so many others, I value your insight very much. I have all of my subscribers under sales contracts using yours. My question is how to value the accounts that are not being monitored for the purpose of a sale. Service contracts for all subscribers are in place with the per service call option being used. Just curious how potential buyers look at these types of accounts.
Regards,
John from Boston
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Answer
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They are looked at as a free ride. The buyer of your RMR accounts will take your service contracts and your list of sale customers, usually for free. You're in the RMR business, you shouldn't be surprised to learn that non RMR assets have little if any value. That includes your store room of out dated inventory. To get a quick and reliable valuation of your alarm company, click here WhatsMyAlarmCompanyWorth.com.
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electronic contracts
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Ken,
After speaking with you earlier, I searched your site to try and find the information regarding the electronic contracts, but was unable to find anything. Could you please point me in the right direction. I know you said you sent out an email a few months back regarding the topic, but I had not yet been added to your mailing list at that time. Thanks for your help regarding this matter.
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Response
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Go to my web site, articles page, and use your search and find feature to locate articles on electronic contracts. Click here: http://www.kirschenbaumesq.com/emailarticles.htm.
I am still struggling with how the electronic contracts comply with the consumer law requirements for notice purposes and specific contract provision and signing procedures. I don't think the issues have received legislative or court consideration yet. If anyone knows of any laws or cases let us know.
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LLC again
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Dear Ken,
I read your e mail every morning and the questions that are submitted and your answers are very helpful to me.
As a Licensed and Insured alarm installer in the State of New York, I would like to know the advantages or disadvantage of changing my company to a LLC.
I know you would not steer me in the wrong direction.
Thank You
Steven Pagliaro
Safe World Alarm Co.
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None, if you're a sub chapter s election corporation. Well, OK, one that I can think of. In New York [perhaps elsewhere] the 10 largest shareholders of a close [non public] corporation are personally liable for the wages of the corporation's employees. There is no corresponding law under the LLC law, so LLC members are not personally liable for the employee wages. This is not enough of a reason to change to an LLC if you are a sub s corp now. It's also not important enough, in my view, to select LLC over sub s.