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service agrrement

Discussion in 'Business Operations' started by j.kelley, Mar 6, 2003.

  1. j.kelley

    j.kelley LawnSite Member
    Posts: 17

    I am looking to write up a service agreement, and I was curious about the cancelation clause part of an agreement. Does anyone charge a penalty for canceling the contract, and if so, what is the normal charge? I was thinking about charging a fee of one month's payment. Is this unusually high, unethical, or just plain normal. Thanks for the help.
  2. adrianvbarrera

    adrianvbarrera LawnSite Member
    Posts: 163

    Just something to think about.

    Why not make it a percentage of the total value of the contract.
    customer signs for $30 cuts for 25 weeks.
    Then the termination fee is calculated from the total value.
    Lets say that you decide on 30% then $750x.30=$225.

    Three good things about this method.

    1) The better the account the larger the amount to get out of the contract.

    2. The amount iq high enough so as to discourage breaking the contract. I have seen guys ask for 30 days notice. Big deal ....what good is a contract if it only binds you.

    3. The percentage can be expressed as "Temination fee is .3 of the total monetary value of the original contract". Sounds alot better than "temination fee is $120". It might scare people away from signing it. Although .3 might be more than $120 in most cases.

    Just my thoughts
  3. greenman

    greenman LawnSite Addict
    Posts: 1,405

    When any cancellation is done on their part, its with a 30 day written notice, and if my party is not at fault, the other party must pay the full remainder of the contract. If they want to cancel in August, they must pay up!
  4. GraZZmaZter

    GraZZmaZter LawnSite Senior Member
    Posts: 740

    Im my contracts, i allow either party to cancel with a 14 day written notice.

    Trying to get money out of a bad situation only makes matters worse.
  5. adrianvbarrera

    adrianvbarrera LawnSite Member
    Posts: 163

    IF they are trying to get out of a bad situation, then waive the fee and refund the last months payment. The customer will see your business as more professional and most likely will refrain from talking really bad about you. Its called hush money.
    I always say a satisfied customer will tell 2-3 people but a dissatissfied one will tell 100 for the next 10 years.

    I misread and did not know that they were trying to get out of a bad situation. That changes everything.

    The termination fee is just to discourage them from continued shopping around once they sign up with you. You don't want them to cancel your contract because some poor soul charges them $5 less than your firm. It really has to be worth it for them.
    The cell phone people do just that.....we need to function like the rest of the industries do. If they can opt out of the contract with 14 days notice then why contract? Don't deal with the extra paper work, Label it as a work order and leave it at that.

    No wonder this industry is suffering.
    We are afraid to do the right thing.

    Just my thoughts.
  6. GraZZmaZter

    GraZZmaZter LawnSite Senior Member
    Posts: 740

    I guess that we just have not reached the pinnacle you have Adrian.

    One day we might be worthy of your acceptance.
  7. adrianvbarrera

    adrianvbarrera LawnSite Member
    Posts: 163

    I am sorry if I come on too strong....I am really new to the lawn business. But not to business.

    When I first came to the site and even now....there are alot of people complaining about not making enough money. They are complaining about SCRUBS killing the industry. It is not one thing tha hurts the industry it is always a compilation of many things sometimes related sometimes they are not. I see us killing our own future and we don't even know it.

    I just try to point out that we...I include myself in all of this..need to get more up to speed. We need to treat our industry with as much importance and respect as any other industry. If we want our customers to respect us we need to respect ourselves.

    That is all all I 'am saying. I don't want to offend anyone. So please take all my advice with a grain of salt and a shot of Tequila. It will make more sense..:)

    Again, If I have offended anyone. I apologize and will limit my words from here on.

  8. GraZZmaZter

    GraZZmaZter LawnSite Senior Member
    Posts: 740

    Well, thank you. Thats more like it.

    Maybe we con now conversate on a more even level.
  9. xpnd

    xpnd LawnSite Senior Member
    Posts: 378

    Would you be willing to sign a servie agreement that causes you to pay a business money just to be able to get rid of them? I know I wouldn't. I have been running service agreements for nearly 6 years now. At first I had a two week written notice of termination which I would usually waive immediately. I don't want to be somewhere where I am not wanted. I have cut that to 1 week this year. I've only experienced the "shop around" syndrome a few times and half of those came back the same year they left but at a significantly higher "penalty rate" I wrote my service agreement to be both customer freindly and protection oriented for my business. The more penalty/punitive conditions you put into the agreement the more suspicious the customer will be about doing business with you.
  10. adrianvbarrera

    adrianvbarrera LawnSite Member
    Posts: 163

    Do you use a cell phone? Read the small print....there is a fee for ending the service contract early. At least most of them do have them.


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