subscriber challenges to contract terms / concerned about sending out new contracts October 5, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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subscriber challenges to contract terms / concerned about sending out new contracts
October 5, 2018
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subscriber challenges to contract terms 
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Ken
    We have a subscriber who wants to discuss and negotiate some of the contract terms.  I know you are available but will charge us if you get involved.  I don't want to incur the expense for this subscriber.
Is it your recommendation that we never alter our agreements?  That’s been our position, but interested in your opinion.
Kerry
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Response
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    Your willingness to negotiate contract terms and incur an expense for legal fees for those negotiations should be measured against the value the customer.  I regularly get involved in contract negotiations with subscribers and their counsel.  Some of the contracts are for substantial amounts of money for installation and RMR, but not all the time; sometimes for run of the mill few hundred dollars for installation and $30 RMR.  Is it worth $250 to $750 for legal fees to negotiate the changes?  Keep in mind that even a $30 RMR contract adds around $1000 in value to your business.  Sometimes you can get the subscriber to pay for the additional expense you incur for the contract negotiations.
    An across the board "we never make contract changes" is too limited unless you are mass marketing inexpensive systems with very little profit margin and you don't have the time to waste negotiating with a prospective subscriber who is getting an installation at cost or below cost and paying $16 RMR.  Better to move on, especially if you're adding hundreds of accounts a month.  
    Also, you can make some contract changes on your own.  You can learn what changes I would typically approve of; just be careful when making the changes, especially if it's to the protective provisions.  
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concerned about sending out new contracts
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Ken: 
    Thanks for the webinar on September 27 2018 on preparing for sale. Is a recording of the webinar available?
    In the current market of mass mailings and everything free I am almost afraid to send out new contracts and put the idea in peoples heads to shop around.  Many years ago I believe I added a notification sheet to your contract to mail out to customers. Do you have a contract that would have an area to fill in a notification list thereby updating information and getting a new contract signed at the same time.
    Thanks
name withheld
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Response
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    The webinar was recorded and is available for viewing at your convenience on our website.
    Though all the Standard Form Agreements have an automatic renewal provision, so the contract does run indefinitely if not canceled, the contract, like the equipment, grows stale; needs updating.  Many alarm business owners feel as you do; concerned about asking the long time subscriber to sign a new contract.  Why rock the boat?
    It's a valid concern, but I think one you need to overcome.  You probably need to better appreciate the necessity for the services you provide and the value you bring to your subscriber.  It's not just an issue of loyalty but familiarity.  You know your customer, the system and your customer knows you and your services.  
    You take loads of chances in life.  Getting your contracts updated and signed is just one of them, and a risk worth taking.  Even if you lose a subscriber, or several, by getting new contracts signed you will be enhancing the value of your business dramatically.  The boost in value can be 10 times or more for the newly signed contracts, and that's a pretty significant amount if applied to all of your RMR.  In other words, it could make the difference of getting 40 times instead of 30 times RMR, so the loss of a few accounts will not be a good reason for not making the effort.
    We include a Call List with the All in One Agreement.  It's a separate form but you can use it as a pretext to sending out the new contract.  And to be clear, I do recommend that you get new contracts signed rather than depend on the automatic renewal provision in the contract.  The automatic renewal provision is a fall  back position, not the preferred position.  Getting a new updated contract is the better course of action.
    If you have a good relationship with your customers and provide good service, you should have good success getting new contracts signed when the existing contracts reach expiration.  Make sure you offer to survey and update the alarm system, not just the contract.
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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
516 747 6700
www.KirschenbaumEsq.com