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Contract Protections For San Diego Subscription Plans: Four Must-Have Provisions
San Diego businesses are increasingly looking at subscription agreements as a way to boost revenues and even drive sales (as a form of marketing and promotion). “Subscription agreement” is the new marketing term for the old idea of time sharing. For example, automobile subscription agreements are emerging as a new way for consumers to have access to transportation. See LA Times article here. As discussed in the article, automobile subscription agreements have prompted proposed changes to California franchising laws.
Subscription agreements allow customers to use your business’ goods and services in a short-term, as-needed basis for a monthly fee. Some retailers see this as a mechanism for maximizing the profitability of declining-value and pre-owned assets. Thus, as described here, BMW offers subscription services for various car models starting at $2,000 a month, but the consumers are not offered new vehicles.
As with any sort of rental or short-term use agreement, the contracts must be enforceable. A good San Diego corporate attorney can help. Here are few “must-have” provisions for any subscription agreement that you and your business might be considering.
San Diego Corporate Law: Subscription Agreement “Must-Have” Provisions:
“Who-May-Use” Limitations
Taking vehicle subscription agreements as our example, generally, such agreements include maintenance, insurance, registration, roadside assistance, and the like in the monthly fee. Depending on the monthly fee paid, the customer can subscribe to a single vehicle model or a “fleet” of vehicles. For obvious reasons, one key provision in any subscription will be the definition of the “user” and limitations on who may be allowed to use the vehicle or other products/services.
Agreement to Tracking, Monitoring, and Waiver of Privacy Protections
For equally obvious reasons, the owner of goods and services subject to a subscription service must be able to track and monitor the location and use of the goods and services. But, there are legal protections that prohibit intrusive tracking and monitoring of use. Any well-drafted subscription agreement will contain prominently placed provisions whereby the user agrees to constant and “at-any-time” monitoring, tracking, and waivers of any privacy protections. Monitoring/tracking would be limited to locating any property subject to the agreement and enforcing proper use.
“Self-Help” Remedies and Retrieval of Property Without Judicial Process
In a similar fashion, provisions must be placed in the subscription agreement allowing so-called “self-help” remedies — in other words, repossession. There are various protections for consumers with respect to debt collection practices and the requirement for judicial process for retrieving and reasserting ownership over personal and real property. Provisions need to be added to avoid those requirements. Otherwise, costly litigation is required which ties up your property for lengthy periods of time.
Indemnifications for User-Caused Negligence and Intentional Conduct
Although maintaining good insurance helps, it is still important that any subscription agreement have provisions whereby the user indemnifies and “holds harmless” your business for any negligent or intentional harm caused by the user. Think about an accident or the user driving the vehicle while under the influence of alcohol and/or drugs.
Contact San Diego Corporate Law
For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Like any rental or quasi-rental agreement, a subscription agreement is complex and detailed. There are many other important provisions that must be included; only a few of the more important have been discussed here. If you are considering a subscription and/or user-share type agreement, Mr. Leonard can help. He focuses his practice on business law, transactional, and corporate matters, and he proudly provides legal services to business owners in San Diego and the surrounding communities. Mr. Leonard can be reached at (858) 483-9200 or via email.
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