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Leasing Company Relations Recommendations
|The current environment for leasing office equipment has become
extremely uncertain. Many dealers have learned that changing leasing
companies can be difficult for the dealer and the end user. When
entering a relationship with a leasing company, here are some of the
issues that should be addressed. The best time to establish these
points is prior to entering, rather than upon exiting, the relationship.
End-Users: Establish that the identity of the end
user is "confidential information" of your company and cannot be
provided to a third party or used by the leasing company for any
competitive purpose including marketing and sales purposes. This
provision should extend beyond the length of the agreement and for at
least one year beyond the conclusion of the last lease entered under the
Term of Agreement: The term of the agreement
should extend for a set period and not cease when potential leases are
no longer referred. The agreement's terms should extend to the
conclusion of the term of the final lease referred. Of course, certain
provisions, such as confidentiality, would extend even beyond the term
of the final lease transaction.
Indemnifications: The leasing company should
indemnify and hold dealers harmless from any claims resulting from the
administration of the lease. Likewise, dealers should indemnify and hold
leasing companies harmless from any claims resulting from the equipment
and service thereof. Too often, the indemnification is limited as being
from the dealer to the leasing company only.
Buyout/Upgrade Terms: Ideally, these would only be
available to you, but legally they have to be disclosed to the end user
as well. The agreement should set forth all the buyout terms with
specificity. Buyout/upgrade terms should only be disclosed upon written
request and supplied in writing. If the end user requests end-of-lease
terms, the information should be supplied to the dealer for
communication to the end user.
Returns: In those instances where a lease permits
return of equipment, the precise procedures should be established.
Dealers are encouraged to take a video of the equipment prior to return
showing all sides of the equipment as well as the machine passing paper.
Receipt of Funds: Allocation of funds received to
lease and for cost per copy and maintenance is important to both
parties. This becomes more important if the end user falls behind in
payments. The fairest resolution is to allocate any funds received on a
proportionately equal basis.
Prepayment: Establish the formula for early buyouts and upgrades of equipment.
Automatic Renewal: Establish the dealer's right
only to terminate during the renewal period. Thus, if the end user fails
to cancel the lease during the prescribed period, you would be in a
position to move the end user into new equipment for an exclusive
Prefunding: Certain leasing companies will prefund
a dealer's anticipated monthly leases. This is much better than
traditional bank financing and should be considered.
Lease Verification: The script used to verify the
lease with the end user should be reviewed by the dealer and be subject
to the leasing company and dealer's mutual agreement. The content of
this communication is important to maintenance of customer goodwill.
Executed Document: How many manufacturers and
leasing companies have received your executed agreement, but failed to
execute it themselves and return your copy? Ideally, both parties should
sign the agreement at the same time and exchange copies. If not,
establish a "tickler" file to remind you to follow up on obtaining a
fully executed agreement.
Lease Payments on Renewal: If the end user allows
the lease to renew, the dealer and the leasing company should share
equally the amount previously allocated solely to the lease payment.
Sometimes this may not occur for one or two months due to the initial
rate. The dealer should continue to receive full payment on any portion
allocated to maintenance and/or supplies.
BTA, GreatAmerica Form Strategic Alliance
For many years, unfair leasing company practices have
been a leading topic of concern expressed in calls to the Business
Technology Association's (BTA)
Legal Hotline, a free service provided to office technology dealer
members seeking industry-specific legal guidance from BTA General
Counsel Robert Goldberg. Meanwhile, in recent months, the exit of
leasing companies from the office technology industry has resulted in
the loss of more than $1 billion in available credit. Dealers have
turned to BTA for a solution and, today, the association is responding.
BTA has established a strategic alliance with
GreatAmerica Financial Services, a highly-regarded leasing company
headquartered in Cedar Rapids, Iowa. Under the alliance, BTA is now
referring dealers who are seeking a new leasing partner to GreatAmerica.
The referral program becomes effective today, Feb. 1. BTA and
GreatAmerica have also developed a guide for fair and equitable lease
relations, which can be accessed online at www.bta.org/leasingcompanyrelations.
"While there is more than one quality leasing company
serving the office technology industry, we believe that one company in
particular stands out among the others — GreatAmerica Financial Services,"
said BTA 2009-2010 National President Bill James. "Beyond offering fair
and equitable leasing agreements and employing a very professional and
experienced staff, GreatAmerica distinguishes itself through its
consultative approach in working with dealers."
GreatAmerica's "innovative and customized approach" has
helped many dealers achieve greater success, said James. The company
also specializes in the administration of managed print services and
associated value-add tools and training. "GreatAmerica provides products
and a level of service that addresses the current needs of dealers," he
said. "Certainly, many dealers hold the company in very high regard."
A comment from one of GreatAmerica's BTA member dealer
partners illustrates the favorable view dealers have of GreatAmerica.
"GreatAmerica has proven to be a true partner," says James Kreikemeier,
president of Capital Business Systems/Modern Methods, Loveland, Colo.
"They have worked with us to enhance our profitability by bringing new
ideas and programs to the table. There is a great deal of confidence
with all our employees in GreatAmerica's ability to deliver the level of
service our customers desire."
Dealers interested in learning more about the services of GreatAmerica are encouraged to visit the company online at www.greatamerica.com or call (800) 234-8787.