School Owner WARNING. Is your contract worth the paper it's written on?

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Permalink Reply by Datis Mohsenipour on December 10, 2009 at 12:33pm

Very interested in seeing what you're getting at here Master Richards!

When will we see more information?

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Permalink Reply by Sensei Nick on December 10, 2009 at 2:07pm

Vey interesting. Can not wait to hear more.

Datis Mohsenipour said:

Very interested in seeing what you're getting at here Master Richards!

When will we see more information?

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Permalink Reply by Master Richards on December 10, 2009 at 2:25pm

Mr. Mohsenipour & Mr. Dougherty,

Thanks for the comments!

There are several misrepresentations regarding contracts. Especially pertaining to contract law. As you may or may not know, every state governs contracts differently. For example: the term of the contract (36 months etc.), the way it is written and Truth-In-Lending disclosures just to name a few. However, there are also federal guidlines in place that you must meet or you could be faced with a $250,000 fine!

I know this may be new to most (if not all) of you, but I'm here to help...

Master Richards

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Permalink Reply by Jon Malach on December 10, 2009 at 4:47pm

Is there a shortlist of things to watch out for?

Ex:
- when doing a 36 month upgrade contract, avoid ________ and ______ in most cases

- on contracts that have a set term then roll over to month to month, avoid _______ and __________ ???

You have all of our attention, some basic guidelines that we could review will help greatly in this respect, and will probably lead to some messaging or phone calls in your direction from those who are reconsidering their contract templates for 2010, would be great timing...

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Permalink Reply by Master Richards on December 11, 2009 at 7:26am

Mr. Malach,

Great question!

Depending on what each individual school would like to do with the contracts really depends on how it is written. My contracts are 3 pages. I know this may seem lengthy, but it really covers all areas. After spending thousands with our attorney our contracts are pretty much iron clad. The next question may be, why? I would have to say when your in the business of having clients sign contracts from $8 to $60K, it better be done right! Not only does this protect you as the owner, but also the client.

To answer your question more directly, I would have to say that Truth-In-Lending disclosures are the most important. Not having this in your contract could land you with a FAT $250,000 fine!!! Now I know most of you may be saying, "no not us" - YES! One look at any contract and I would be able to tell you immediately if you fall under this dangerous umbrella.

Some of you may not be concerned due to the collection process. For example: you may not want to collect on it due to default. This is ok, however, you could still be fined.

I hope this helps.
Master Richards

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Permalink Reply by Master Richards on December 15, 2009 at 8:39am

The BAD news x2...

After reviewing 5 contracts from various areas of the country, ALL 5 contracts DO NOT MEET either state or federal guidlines, and, ALLare subject to a $250,000 FINE!!!, if caught.

The second part of the bad news... 2 of the contracts were written by a billing company that you may be using???

Do not let this just slip by, you need to do something now! This is not a joking matter.

If you need me, please do not hesitate to ask?

Good Luck...
Master Richards

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Permalink Reply by SMTS on December 16, 2009 at 10:18pm

Hi Mr. Richards,

Sorry, I do not want to come across as rude or disrespectful.

1. Do you have examples of MA Schools that have been fined $250,000 for poorly written Agreements?

Thanks,
John


Master Richards said:

The BAD news x2...

After reviewing 5 contracts from various areas of the country, ALL 5 contracts DO NOT MEET either state or federal guidlines, and, ALLare subject to a $250,000 FINE!!!, if caught.

The second part of the bad news... 2 of the contracts were written by a billing company that you may be using???

Do not let this just slip by, you need to do something now! This is not a joking matter.

If you need me, please do not hesitate to ask?

Good Luck...
Master Richards

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Permalink Reply by Master Richards on December 17, 2009 at 11:14am

John,

No, I do not think you are coming across rude or disrespectful.

But you do have a good question!

Yes, I do have an expample. It was a school here in Florida. The opposing attorney
to a suit filed was actually the one who brought this to the instructors attention. After
several arguments from each side, the suit was dropped due to the contract being
written incorrectly! The school was faced with a class action lawsuit and was facing a
$250,000 fine. The minimum you could face is $5,000 per contract, however, if more than
one contract was written - you could be faced with the BIG FAT $250,000.

I hope this helps. If you would like more info or would like me to take a look at what you
are currently doing - It would be my pleasure.

Also, as I mentioned prior and to the begining of this forum. Most, 9.9 if not ALL school
owners have no idea that this problem even exists.

Master Richards

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Permalink Reply by SMTS on December 18, 2009 at 5:07am

Hi again Sir,

What circumstances lead to this type of Contract being contested in a court case?

Thanks,
John

Master Richards said:

John,

No, I do not think you are coming across rude or disrespectful.

But you do have a good question!

Yes, I do have an expample. It was a school here in Florida. The opposing attorney
to a suit filed was actually the one who brought this to the instructors attention. After
several arguments from each side, the suit was dropped due to the contract being
written incorrectly! The school was faced with a class action lawsuit and was facing a
$250,000 fine. The minimum you could face is $5,000 per contract, however, if more than
one contract was written - you could be faced with the BIG FAT $250,000.

I hope this helps. If you would like more info or would like me to take a look at what you
are currently doing - It would be my pleasure.

Also, as I mentioned prior and to the begining of this forum. Most, 9.9 if not ALL school
owners have no idea that this problem even exists.

Master Richards

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Permalink Reply by Debra Gaines on January 2, 2010 at 9:40pm

I'm in Georgia and I'm concerned about the do your own "electronic billing" thing. We are technically acting as lenders when we offer monthly payments in lieu of the client paying in full then add the billing and all of a sudden we're a finance company. Most companies (furniture, computers, etc) that offer financing do so through lenders (HSBC, Wells Fargo, etc). Pawn shop owners have to be licensed as "lenders" in Georgia as they do direct lending. At what point will we fall under that heading? Does the use of a licensed billing company protect us from this liability? If we are acting "illegally" does that eliminate our ability to collect on bad contracts? I was a commercial lender before opening my schools and I don't care to go back to dealing with the Fed:( Any thoughts or experience with this?

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