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Comments On Central Station Taking Over Abandoned Dealer Accounts - December 2, 2016


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COMMENTS ON CENTRAL STATION TAKING OVER ABANDONED DEALER ACCOUNTS
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Ken,
    The idea of a dealer abandoning its monitored accounts makes about as much sense as flushing money down the toilet.  Clearly, monitored accounts with your five year agreement are worth way more money than accounts with no agreement, but, even those accounts have some monetary value with huge liability exposure.
    The installing company that abandons its accounts is likely to be the same dealer that hasn't heard about NFPA or UL cross listing and compliance.  We would be on high alert if our contract central station went over the line and became our direct competitor.
    We were curious if other CS operators have had similar situations.
Best,
Randy Stone
Estate Watch LLC
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Ken
    As a central station you should stay out of the business of installing and repairing.  You have other dealers that can take over those systems. If on the east coast (Maine to Florida); Call us
Mike
CSS
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RESPONSE
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    I agree with both comments.  
    You probably don't want to use a central station that competes in the retail market.  It's not a hard and fast rule, but it makes sense that you don't want to give a local competitor an advantage if you don't have to, and one thing is clear, you do have many central station options.  See The Alarm Exchange in the central station category for those options.
    Alarm monitoring contracts, especially the Standard Form Agreements, take like negotiable currency.  There is a market for subscriber alarm contracts in just about every area in the country.  If there are two alarm companies servicing the area then there is going to be a market to sell the accounts, and most areas have many alarm companies competing.  Abandoning the monitoring accounts has to be about something other than sound financial planning.  Acute illness comes to mind or having to get out of town fast and disappear another.  That of course shows bad planning on top of everything else.  I don't think everyone needs a "get away bag" handy, but you should have an exit strategy in mind.  When should you start thinking about the exit?  Pretty much when you start your business.  You incorporate, you get the Standard Form Agreements, you retain your RMR and you think about who is going to buy those accounts when you're ready.  It's not that complicated.  
    Your subscriber accounts are worth between 15 and 50 times, give or take.  If you use the Standard Form Agreements your multiple is going to be at least 35 times.  No contracts or poorly written contracts [sometimes worse than no contract] and you are looking at the low end.  Strong contract, strong operation [sales, organization] with "enterprise" value, and you tip the scale over 40 times.  And yes, you can get more than 50 times and sometimes less than 15; depends how much attention you give to these articles.
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