Earlier this year I read in your 'alarm articles' that the 'All In One Agreements' provide for an initial 7 year term for residential subscribers, and 10 years for commercial subscribers, all auto-renewing month-to-month.   All good.
    In January of this year we purchased the Residential Lease 'All In One Agreement' for use in California, and it provides for a 7 year initial term.  All good.
    But in today's article I read: "The Standard Form Agreement is for 5 years, so Vivint's 5 year agreement is in line with industry standard.  That raises another interesting question.  You wrote:
    "What makes industry standard?  can see two possible alternative criteria.  Either it's based on the most customers who sign alarm contracts, or its based on what most alarm companies have in their contracts.  So is it company or subscriber based, or both?  My guess is that ADT, one company, has the majority of alarm subscribers.  But thousands of alarm companies use the Standard Form Agreements.  There is great similarity among most alarm agreements so often the unified approach is the same.  In California ADT has a 2 year term, but most others have a 5 year term.  I think 5 years would be the proper measure of what's customary."
    Does this reflect evolving thoughts about industry standard / customary residential agreement initial terms (5 years vs 7 years), or have I overlooked something? Could you comment please?
    The Standard All in One forms [and their predecessors] have always been 5 years for residential and 10 years for commercial.  These terms can be changed by you, either in the printed form or by hand at time of execution.  The 5 or 7 year terms is relatively arbitrary in the sense that if 7 is not allowed then 5 may not be much better.  
    There should be some rational for a term agreement.  It should make sense from an economic point of view for both the alarm company and the subscriber.  A term should be long enough to justify the reduced price for the installation and for the services to be rendered.  Subscribers benefit by having reduced installation charges.  That's an easy justification.  Since a good case can be made that most service calls are expected shortly after installation and perhaps towards the end of the term as equipment begins to fail, a term agreement can also be justified.  Even a monitoring agreement can justify a term agreement because there are up front costs that are generally not charged to the subscriber, such as equipment purchase, installation and programming by the dealer and set up charges by the central station.   These expenses associated with a monitoring agreement are probably less and easier to estimate, so a longer term may be more difficult to justify.  
    There are plenty of lawsuits where alarm company agreements with 5 or 10 year terms have been enforced.  However, you should understand the reasoning behind these term agreements rather than simply relying on an argument that the "contract says so, so I am entitled to enforce it".  
    Commercial term agreements are not going to be scrutinized as closely since courts are likely to hold a commercial subscriber to the contract terms.  That said however, you should be able to justify the charges to avoid getting into the murky waters of unconscionable terms are will not be enforced.
    As far as what is standard I stand by my earlier comment, which is quoted above.
Question: cancellation notice when mailing contract
    We are using your alarm contracts for our customers.  When we send the contract by mail, what date do we use on the Notice of Cancellation?  Do we use the date that we are sending the contract, or the date we expect that they will receive the contract.  This will make a difference for the date they have to cancel by.
Thank You,
Lisa Brown
F&S Logo
Napreville, IL
    Good question.  A 3 day notice of cancellation is required in all states.  It provides a "cooling off" time to give a customer some time to recover from a high pressure sales pitch.  The statute is generally referred to as the Door to Door Sales Act, and that's because it's intended for pressure sales pitches at a residence.  Typically the statutes require the notice of cancellation unless the sale, which means the execution of the agreement, takes place at your regular place of business.  So the notice is required not only when the pitch is made at the residence, but if it's made at a convention, seminar, promotional event or perhaps a satellite office like a kiosk at a mall.  
    What purpose is served requiring the cancellation notice when the sale takes place on line or through the mail?  I suppose an on line sign up could be facilitated and coordinated with a telephone sales pitch.  The customer is persuaded to sign up while the highly trained telephone salesman is pushing the sale.  A mailed contract however does not have that same level of pressure.  No matter how skilled a sales pitch may be, by the time the contract arrives in the mail [assuming it ever gets there with the increasingly deteriorating US mail service] the customer has had plenty of time to "cool off".  No cancellation notice should be required.  Keep in mind that others may want proof that you complied with the cancellation notice requirement or justify non compliance.  So you may want to retain proof of execution through the mail, such as your cover letter, instructions on execution and return and the mailing, including envelop, from the subscriber.  
    If you want to play it safe and provide a 3 day notice of cancellation then send the cancellation form with the contract.  Date the form sufficiently in advance so that the subscriber will have at least 3 days after the contract is received by the subscriber.  You should also keep in mind that the subscriber is entitled to a fully executed copy of the contract, so you may want to sign it before sending it to the subscriber.  You would then instruct the buyer to return a copy of the fully executed contract to you.  
    By the way, be aware that the 3 day notice of cancellation appears directly above the subscriber's signature and it refers to a cancellation form that you are required to provide.  The 3 day cancellation notice is therefore separate from the actual cancellation form.  You are required to fill in the date of the cancellation form giving the subscriber the outside date for canceling.  The Standard Form Residential All in One has the cancellation notice where it belongs, in the format required, and we provide you with the actually cancellation form.  The cancellation form is presented to the subscriber in original and two copies.  You leave the original and one copy; have one copy initialed and retain that copy.  This third copy that I am suggest you get initialed and retain is not required by statute.  You are only required to leave the original and one copy of the cancellation form.  I want you to have proof of deliver, so I want you to get and retain a receipt.  You can do it same time you get the Disclaimer Notice signed.  Since theDisclaimer Notice isn't a contract you don't have to leave a copy with the subscriber, though you may want to so that the subscriber is reminded of all the! items on theDisclaimer Notice.