KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comment on month to month renewal / Webinar today
May 3,  2022
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TODAYS WEBINAR:
Licensing webinar – nuts and bolts of getting licensed
Webinar Title:  Filing for and renewing your alarm license
Topic Details:  Once you know where you need the license and what license you need, and you know you’re qualified, The Cmoor Group handles the minutia details filing for the license and has the software to monitor for renewal compliance.
When:  May 3, 2022 at 12 PM ET
Presenter:  Connie Moorhead, President of The CMOOR Group. connie@cmoor.com or call 502-254-1590, ext. 101
Hosted by: Ken Kirschenbaum,Esq
Who should attend:  license holders, license compliance officers, owners, managers
Register Here:  https://attendee.gotowebinar.com/register/8242655366269110283
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Comment on month to month renewal from article on April 28, 2022
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Ken-
          Glad to see your answer on this.  As a buyer for many years, I would rather buy a contract that is well "seasoned" and renewing monthly than a brand new multi-year contract with no payment history. 
           I was surprised that you did not go into the necessity of having, at least, a month to month contract as protection for your company, vs. no contract at all. 
          Maybe another response for another time.
Thanks
Kelly Bond
Davis Mergers and Acquisitions Group
847-226-1830
kbond@graybeardsrus.com
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Response
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          The focus of the article on April 28, 2022 was the valuation of month to month renewal as opposed to longer term renewal from the “return on investment” or “collections” perspective.  So the original question of whether a month to month renewal contract was “worthless” was answered based on financial considerations.  But Kelly is correct that there is a threshold issue of whether a month to month renewal is better than no contract [or poorly written contract] at all. 
          I did touch on that with this sentence in my April 28, 2022 article:
          “Accounts that score low on all factors will, predictably, bring the lowest multiple offers, if any at all.” 
          There are accounts that are simply not salable, at least to an alarm company owner who understands that just one loss can wipe out his company.  I suppose there are alarm owners who don’t understand or just don’t believe this, or perhaps are willing to chance it.  I doubt that this risk-taker is building much of a business, certainly not one that will fetch a good price for the accounts. 
          Why is this?  One of the unique features of a properly written alarm contract is “protective” provisions that “contract away liability even for negligence”.  Though not the only industry to employ such contractual protection, the alarm industry has embraced the protective contractual provisions, so that every intelligent and reputable alarm company uses proper contracts.  Probably half the alarm industry uses Kirschenbaum Contracts™ and a good percentage more stole the contracts or plagiarized from them [in violation of copyrights]. 
          The prospects for getting involved in a lawsuit because a subscriber or third party suffered loss blamed, rightly or wrongly, on the alarm company, are so likely and costly to defend [not to mention actually being held responsible for the loss] the idea of an alarm company doing its business with its customers without a properly written contract is, to say the least, very bad business practice.  In fact it would be hard to find any successful alarm business that did not rely on proper contracts.  While the contracts may be month to month, that effects only the longevity of the relationship with the subscriber, not the level of risk assumed or accepted by the alarm company in the performance of its services. 
          No contract or poorly drafted contracts have little or no value to a potential buyer.  The accounts may generate good cash flow for the owner but the owner shouldn’t expect that the business is building equity, at least not the equity it would be building even if it used month to month Kirschenbaum Contracts™.
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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