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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 agreement.

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 12-month period.

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.

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