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Why Your Customers Should Care About Licensing

Ever wonder what the consequences are for a client who uses an unlicensed installer? Legal expert Ken Kirschenbaum explains.

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What are the negative ramifications for a customer who uses an unlicensed alarm installer?” That was a question I recently received I thought universal enough to share here.

The interested party added the following information: “I was on an estimate the other day and got into a conversation with a prospective client about the importance of using a licensed alarm company such as mine. She had researched alarm installers in the state of New York and decided to call only licensed companies as she assumed they would be more qualified to do the job. However, while she found there to be penalties for alarm installation companies operating without proper licensing, she was unable to find any drawbacks for a client deciding to use an unlicensed installer.”

The issue isn’t limited to New York; it’s a great question for all licensed jurisdictions, which are most states. Considering all of the requirements for getting an alarm installer license in New York, I’m surprised this person could not come up with a few quick potential repercussions for using an unlicensed provider.

So why would a customer care if the alarm dealer was licensed or not? Maybe price is all the customer should care about, or a suave sales pitch, or immediate installation, a fancy advertisement or reputation, or just a recommendation from a friend. I can think of a few reasons to justify the need for licensing, and I’m sure there are many more:

  • Licensing laws generally include some level of competency requirements;
  • Education and testing; maybe continued education or certification levels. The license ensures at least some level of competence.
  • Criminal background check for all employees who will have any contact with the customer. Customers don’t do their own background checks and this may be the single most important response you could offer.
  • Some jurisdictions require licensed dealers to maintain certain minimum standards of operation, such as contracts, insurance and training.
  • Most jurisdictions will receive and act upon complaints made against licensed contracts, a remedy that may not be available if the customer chooses to deal with an unlicensed contractor.
  • A licensed dealer has demonstrated that at a minimum they are willing to abide and conform to the licensing laws. Choosing to disobey the licensing law may be ignoring lots of other laws that are designed to protect consumers.

You may want to ask a few questions of your own when confronted with a customer who is making you bid against an unlicensed contractor. And let’s face it, you may have some difficulty competing with an unlicensed contractor. Why? Because the unlicensed contractor doesn’t have your expenses for license compliance, insurance, employee wages; he might even get his equipment at Midnight Alarm Supplies or off a truck.

So ask, would the customer allow his or her kids to be picked up by a school bus employing drivers without driver’s licenses or vehicle insurance? No? Then why would they allow someone unlicensed into their home and trust them with their security and safety?

Ken Kirschenbaum has been a recognized counsel to the alarm industry for 35 years and is principal of Kirschenbaum & Kirschenbaum, P.C. ( His team of attorneys, which includes daughter Jennifer, specialize in transactional, defense litigation, regulatory compliance and collection matters.

The opinions expressed in this column are not necessarily those of SSI, and not intended as legal advice.

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Article Topics
Business Management · Background Checks · Ken Kirschenbaum · Legal Briefing · Licensing Laws · Licensing Standards · All Topics

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Background Checks, Ken Kirschenbaum, Legal Briefing, Licensing Laws, Licensing Standards

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