As many of you know, the Brink’s Home Security Authorized Dealer Program changed names after a long run and became Broadview. Shortly after weathering that adjustment, Broadview sold to ADT. The transition has placed many of those dealers in a quandary. Let’s take a closer look.

Some of the dealers were welcomed to the ADT program, others were rejected. Some, I assume, resisted becoming ADT dealers. All of them, at least those who contacted me, were faced with restrictive covenants in the Brink’s dealer agreement that prohibited the dealer from soliciting the subscribers sold to Brink’s or Broadview, and also restricting the dealer from competing in the alarm business.

Can ADT hold the Brink’s/Broadview dealer to the Brink’s dealer agreement and enforce the restrictive covenants? Analysis of the law dealing with restrictive covenants would suggest that those provisions are enforceable, particularly a provision that prohibits a dealer from soliciting the very subscribers that were sold to Brink’s.

Courts in different states interpret and enforce restrictive covenants in different ways, some holding to the sanctity of contracts and others considering the needs of the restricted employee to earn a living balanced against the entitlement of the employer/buyer to protect its business interests. Dealers that signed up with Brink’s, or any other program for that matter, may not have considered what happens when the deal doesn’t work out and terminates. Certainly none thought they would be out of business and unable to enter the alarm business in their hometown (I’m not sure Brink’s restriction is that limited).
 
But I approached the issue with a different view. What exactly was the dealer agreement all about? The answer may surprise you, or may seem obvious.

The Brink’s dealer agreement granted the dealer the right to use the Brink’s trademark. The dealer was required to use the mark in an approved way; all equipment was to have the mark, and equipment had to be approved. Of course, the attraction to the Brink’s dealer program was the high recognition that the Brink’s name had. The famous trademark seemed to blend well with security systems. But Broadview had no such name recognition, and only a well financed and planned marketing campaign could help transform an otherwise nondescriptive name into a high recognition brand. The transition could not have been easy for the dealers. New names had to be used on everything from equipment, ads, truck lettering, stationary, etc.

Then came ADT. Of course there was instant name recognition, but not all dealers were pleased with the ADT brand or reputation. ADT relied on the Brink’s dealer agreement to negotiate its way with dealers.

The Brink’s dealer agreement, however, does not appear to have any provision that permits the change in trademark. There is nothing I read that permitted the Brink’s dealer program to call itself something else. The dealer agreement licenses the Brink’s mark to the dealer. It does not license any mark the program decides to use.

I concluded that the Brink’s change to Broadview and then to ADT renders the contract unenforceable by ADT; the dealers would be released from their obligation and any provisions in the agreement. I believe ADT could still prevent dealers from soliciting the accounts sold to Brink’s/Broadview, but that’s because the law implies a restriction in that situation, not because of the contract in place.

Before you run and rely on this advice, keep in mind that I read only the agreements sent by a few dealers; there may be other agreements in place. Have your own attorney read the agreement and advise you.

Ken Kirschenbaum is managing partner in the law firm Kirschenbaum & Kirschenbaum, where his daughter, Jennifer, is also a partner.

The opinions expressed in this column are not necessarily those of SSI. The content is intended to be informational and not taken as legal advice.

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