Why is month to month renewal better than longer term renewals / Party invite November 22, 2025

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Why is month to month renewal better than longer term renewals / Party invite
November 22,  2025
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Why is month to month renewal better than longer term renewals
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Ken,
Concierge client here...
Our Kirschenbaum Contracts change to monthly once the original contract term is fulfilled (for us this is two years). Our previous contracts auto renewed annually. Why is it better practice to renew month to month verses annually? One would think annually would be the play here so they are contracted for a longer amount of time.
Also, we haven't updated our Fire All in One agreement in a couple years. We rarely do fire work. Are there enough changes that we should update this form? If so, maybe we can do during your sale.
Thank you.
Lindsay
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Response
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   Whether to have auto renewal month to month or year to year or "like term", which could be 10 years or whatever the original term is, that's the question. Let me disabuse you of one notion that is likely on your mind, which is, is the longer term renewal make the contract more valuable? Put another way, will a longer term renewal lock the subscriber in for the longer period of time and will that longer term agreement be worth more, command a higher multiple, if you were selling the accounts?
   In my opinion, subscribers often object to the renewal provision, even the monthly, though that is easily explained and always accepted. But longer term, especially "like term" if the original term is lengthy, gets attention for subscribers and their counsel. In just about every state any renewal exceeding more than one month requires different and more complicated Notice of Auto Renewal, and in my experience, you're not going to comply with the law, so the renewal won't be enforceable anyway. So I am sure there are some subscribers who will feel compelled to pay through the end of the renewal period, they are likely so few that it isn't worth arguing with the many more subscribers who will challenge the auto renewal provision if beyond the month to month. Keep in mind that the auto renewal provision affects other provisions, such as the liquidated damage provision in event of subscriber default. That is a provision that is often challenged and when the contract itself is month to month or the renewal is then limited to month to month it makes the liquidated damage provision easier to accept.
   Alarm companies recognize that most alarm customers remain customers for long time than the original contract period. I can't recite the statistics for longevity but I believe that you can expect your fire alarm leased systems to remain customers for 10 or more years. You should expect other type of systems to also be needed beyond the original contract period, and with technology getting more complex, and you in control of the programming, you can expect customers to be reluctant to cancel or change alarm vendors. Obviously your level of service, customer satisfaction and pricing is important, in fact, usually more important than the contract terms or longevity. Expect unhappy customers to cancel with you no matter what the contract calls for. If you really are in breach of the contract you won't be able to enforce it.
   Buyers of your accounts understand this, and those that don't are unfamiliar with the industry. Buyers are not buying the contract stream like they are buying promissory notes or debt that gets paid and that's it. In this industry the expectation is that revenue will continue well beyond the original contract term.
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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