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what legal help you'll need to enter the DIY alarm business February 14, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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what legal help you'll need to enter the DIY alarm business
February 14, 2018
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what legal help you'll need to enter the DIY alarm business
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Ken,
    I am a small alarm dealer who recently started offering a Do it Yourself  alarms, so I have customers all over the US.  I have ran into some questions on if I need any license/permits since I am only a middleman.  I sometimes sell the equipment, other times they buy it elsewhere, they install and service it.  They contact us for monitoring services and our third party Monitoring company monitors them.  So I’ve been wondering on the requirements of my business acquiring customers nationwide.  
    Also, I have some “terms of service” and “terms and conditions” agreements on my website and on my alarm monitoring forms but I have never had them approved or reviewed to make sure my business and I are both covered for liability.  
    I’ve tried to find a local law firm to help and be an attorney of record for my business but they want to bill me huge retainers just for them to research my areas of liability since the alarm business is complicated and then adding the nationwide customers.  
    Any advice and quotes you can offer would be appreciated.   My business is located in Indiana
Thank you
name withheld
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Response
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    Am I to blame here?  I encouraged alarm dealers to embrace the DIY market, sell it to their subscribers and to enter the nationwide market.  Why not, I counseled that all you need is a website, a manufacturer to provide the product, a central station to monitor and a marketing plan. 
    But if I suggested you become a doctor I wouldn't expect to hear from you that you opened a medical office and surgical center, and what do you do now, what licenses do you need etc.
    The DIY market is growing dramatically; no end in sight.  The customer buys the equipment from you or on line from the manufacturer and you offer to provide the professional monitoring, which you subcontract to a wholesale central station.  How much easier does it get?
    Well in your case, you do have "some terms of service and terms and conditions", though they haven't been reviewed by a lawyer, who you apparently can't afford.  You think you're the middleman because you don't manufacture the equipment and you don't do the monitoring?  Wake up.
    You are selling the equipment to customers all over the country.  You and everyone else has figured out that the money is not in the sale, but in the monitoring.  You figure you'll sub out the monitoring, charge the customer $20 bucks a month for monitoring and pay the central station $4 bucks a month, making a cool $16 gross profit.  
    Here's the thing.  You can sell or promote the sale of the equipment without a license.  Because you are selling or promoting alarm / life safety systems, you should protect yourself with a contract.  And you need E&O insurance.  You don't need a license for that part of the business, but you also don't make any money from this part of the business.  The goal is build up your monitoring business, the monitoring RMR.  You will need a contract for the monitoring services and it has to comply with all the laws in all the states where you will have customers.  You will need a license in at least 20 states and hand full of cities and municipalities.  That's right, you need the licenses, and so does your central station and you can't use your central station's license.
    You mention that you can't find a local attorney who knows the business and they want a huge retainer to learn it.   Well, at Kirschenbaum & Kirschenbaum we already know it.  And we don't require a huge retainer.
    Here's what we do require.  You need to start with our Nationwide DIY agreement.  You get it at www.alarmcontacts.com.  Then we will counsel you on the licenses you need and assist you with getting those licenses.  We will assist you with finding a central station and help negotiate the contract with the central station. We will counsel you on the insurance you need and recommend a reputable carrier.  We will assist you with your marketing, providing the agreements that you may need, depending on your marketing plans.
    Finally, after some time, you can avail yourself of our Merger and Acquisition department, to buy or sell accounts, or our Bankruptcy Department, depending on how things go.  Hope that explains things.
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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