KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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sign up for Group and Private meetings in Vegas / Comment on getting out of fire alarm inspection contract/question about no RMR jobs
March 7, 2024
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Private and Group meeting schedule now available
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Group Meetings: See schedule below. Reserve your spot by calling Stacy Spector at 516 987 8428.
Private Meetings:
Schedule a Private Meeting with Ken Kirschenbaum by calling Stacy Spector at 516 987 8428.
Register for a Group Meeting by calling Stacy Spector at 516 987 8428
Schedule Private meeting with broker Rory Russell by calling Stacy Spector at 516 987 8428.
Group Meetings: Topics and Schedule
Tuesday April 9. Group Meeting: 3:00 pm to 4:00 pm – Monetize on your monitoring accounts; new incentive program; learn how to get unheard of incentives from your central station or move to another one. Group meeting conducted by Ken Kirschenbaum.
Wednesday April 10. Group Meeting: 11:00 am to 12:00 pm - Selling and buying alarm accounts; Things to know. Group conducted by Ken Kirschenbaum.
Wednesday April 10. Group Meeting: 2:00 pm to 3:00 pm – State sales tax and complex company valuation. Group meeting conducted by Mitch Reitman of Reitman Consulting Group.
Wednesday April 10. Group Meeting: 3:00 pm to 4:00 pm – Central station – dealer relationship; contract issues; understanding the dealer agreement terms and why you need the K&K Rider. Group meeting conducted by Ken Kirschenbaum.
Thursday April 11. Group Meeting: 10:00 am to 11:00 am - Insurance for your alarm business – best options; availability, pricing and claims. Group meeting conducted by Shawn Iverson of The Insurance Center.
Thursday April 11. Group Meeting: 11:00 am to 12:00 pm – Contracts – which ones you need and why you need them. Group meeting conducted by Ken Kirschenbaum.
Thursday April 11. Group Meeting: from 3:00 pm to 4:00 pm -
The Corporate Transparency Act. Group meeting conducted by Mitch Reitman of Reitman Consulting Group.
Private Meetings with Rory Russell of AFS:
Schedule a private meeting with Rory Russell of Acquisition and Funding Services (AFS) to discuss buying or selling security, fire and integration business. Available times to meet with Rory Russell are as follows: Wednesday April 10 and Thursday April 11 between 7:30 am and 11:00 am and 12:30 pm and 4:00 pm. Contact Stacy Spector to schedule a private meeting with Rory. Call 516 987 8428
ALL TIMES ARE PACIFIC STANDARD TIME.
Contact Stacy Spector, Esq. for all scheduling at Sspector@kirschenbaumesq.com or 516-987-8428.
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Comment on getting out of fire alarm inspection business from article on February 24, 2024
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Ken
I’m responding to your February 24, 2024 email from Eric who wants to get out of the Fire Inspection business. Eric should not only consider your legal advice that he can’t breach a contract; he should also consider that contracted inspection revenue can be considered RMR and can add value to his company.
Contracted inspection revenue is great revenue. It is generally required by law or ordinance, can be scheduled in a two or three week time frame, the cost is easy to predict, and the alarm company can typically bill for repairs. Why would anyone want to get out of doing inspections? Well, maybe they didn’t get a well written contract and can’t charge enough.
Mitch Reitman
817 698 9999 XT 101
Reitman Consulting Group
http://www.reitman.us
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Response
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RMR for inspection, especially fire alarm inspection, and RMR for repair service, are often overlooked or avoided by alarm companies. This is probably a mistake, especially when you are looking at the end of the tunnel, gearing up to sell the accounts. Per Call revenue for repair service and inspection is usually not sellable, especially when the bulk of your business embraces the RMR model, which is obsequious for alarm monitoring revenue.
To see how to monetize non-RMR revenue, see next comment and response
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question about no RMR jobs
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Ken
Sometimes we sell jobs without RMR (to my great chagrin). The customers review our contract and note that we have a 5-year term written in and don’t understand why it’s there if there are no recurring services. If a customer has no RMR can we put “N/A” for the term length, or would this invalidate the contract in some respect and/or hamstring our ability to sell recurring services to them in the future? What would you recommend we do if a customer is requesting no term because they have no recurring services?
Thank you,
Dan Gatsakos, General Manager
Active Alarm Company, Inc.
Lake Zurich, IL
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Response
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First I’ll address a very legal issue. You do in fact have to have a term in your agreement because your Commercial All in One has checked the Per Call Repair Service Option. That means the customer can call for repair service if it chooses, and you can provide the repair service, if you so choose. Whether you provide the service, or not, that service call is governed by the Commercial All in One, not a handshake. This is vital because you may make a mistake on the service call and need contractual protection, which you would not have if your contract has no term and is used solely for the sale and installation. Note that a return to the premises for a warranty call would be covered by the contract because it’s part of the sale and installation.
If your customer absolutely refuses to have a term then you can simple let the customer know you will not be returning for service calls; you should ceremoniously uncheck the Per Call Service box. We get this with refusal to allow automatic renewal, as if that’s some trap you’re trying to get away with. My answer to that, if really insisted on by the customer, is simple. I let the customer [and alarm client] know that all services under the contract will come to an end the final minute of the contract term; it will not be extended under any circumstances; the alarm company will provide no notice to the customer that services will or have terminated. If a fire alarm the alarm company will notify the AHJ of monitoring termination, but not the customer. This is obviously a dangerous practice and quite frankly my legal advice is to refuse to provide any after-install services for this pain in the neck customer. You certainly cannot continue service once the contract expires for many reasons I won’t elaborate on now.
A non-RMR transaction with your customer may still create equity in your business, though not with the same certainty as RMR revenue. EBITDA calculated sales are possible and actually becoming more common [though not the usually deal by any means, yet] because buyers are funded by OPM [other people’s money] run by hedge funds and they view the alarm business from their perspective, bottom line profit. Yes, that doesn’t always translate in the alarm business because of economy of scale; one alarm company doesn’t have the same operating expense ratio as another.
There are aspects of the alarm industry that lend themselves to non-RMR revenue. Fire alarm protection [suppression systems] are first on my mind, but access control is another good example. Of course those of you using the Fire Protection All in One and the Commercial All in One know that both contracts, like all Kirschenbaum Contracts™focus on and emphasize RMR revenue. Access control requires repair service and you may be able to sell Administration Service. Fire Protection requires service and inspection. These can be RMR services.
Those alarm companies [or fire protection companies] not focusing on RMR usually believe that it’s better idea to charge more for the sale and installation than discount the sale and installation and hope to recoup profit from the RMR. That’s fair, unless you can figure out how to get both, a profitable sale and installation, and the RMR.
If your business is primarily non RMR your sale is going to be EBITDA based. This is often the case for Fire Protection Companies. One broker stands out for this kind of business, Rory Russell. He will be leading a Group Meeting in Vegas and also scheduling Private Meetings. These meetings are free, easily accessible and guaranteed to be informative. See the schedule above and call today to reserve your spot. Space and time is very limited, so call today.
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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
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