Building Better Contracts: Dos and Don’ts for Creating Rock-Solid Service Agreements

As the late, great film producer Samuel Goldwyn once pointed out, “A verbal contract isn’t worth the paper it’s written on.” These wise words hold true for any type of agreement drawn up between a company and its customers. However, written contracts are particularly critical in the highly regulated, ever-evolving pest management world.

“The biggest mistake most make in our industry is not having a contract or agreement at all,” emphasizes Jeff King, president of The Pest Rangers, a family owned and operated company based in Wilkes-Barre, Pennsylvania. “Many smaller companies may have a service contract or agreement for their home or business plans that offer reoccurring services, but many lack contracts or agreements for common one-time services, such as bed bug, mosquito, termite or other service offerings their company provides.”

Steven Rubin, senior managing attorney with Rollins, Inc., agrees, adding that contracts are a must-have in pest management industry. “The objective of any business contract is to fully and clearly outline the business relationship between a business and its customer,” he explains. “A pest control contract is no exception.”

If you want to build water-tight contracts, you’ll need to steer clear of some common pitfalls. Keep reading to learn how to avoid five common pest control contract mistakes.

Mistake #1: Using a cookie-cutter contract.
As pest management leaders draft a contract, they are often tempted to find a generic form online and use it as a template. Big mistake, Rubin says.
“The pest control industry is a highly-regulated one that often uses special terms and offers unique challenges,” he stresses. “You need a contract that specifically deals with your specific business and industry.”

In some cases, you may consider modeling your contracts after a competitor’s. Another major no-no. “Don’t be lulled into simply copying a competitor’s contract,” Rubin warns. “Every PCO has its own business practices, its own core values, different resources, varying service offerings and guarantees, and quite possibly a unique appetite for risk. Accordingly, your contract should reflect YOUR values and concerns, not those of your competitor down the street.”

Mistake #2: Not getting a lawyer involved.
If you’re considering drawing up a contract without the assistance of a lawyer, think again.
“It’s important to include your insurance agent and attorney when designing a contract or agreement,” remarks King. “In the end, this is who you will turn to when things go south.”

However, when it comes to creating solid contracts, not just any attorney will do. “Hiring an outside lawyer or law firm is a good start, but make sure it’s someone who understands your pest control business and its specific risks,” Rubin suggests. “A lawyer who specializes in drafting computer software contracts won’t be nearly as effective as someone who understands the pest control business.”

Mistake #3: Bending the rules.
Once you have an agreement in writing, King says it’s essential that you stick to the terms. “Bending the rules and doing things other ways can set you up for trouble,” he explains. Of course, this means you may need to update your contracts from time to time. “Oftentimes, companies change their terms or language in their agreements,” King adds. “Don’t be afraid to do that as you grow.”

Mistake #4: Being unclear about your scope of service.
Rubin says this is a common blunder among PMPs: they create a contract that doesn’t sufficiently cover their company’s scope.

“One size doesn’t fit all,” he remarks. “Termite control or bed bug control present very different risks than general pest control, so the contract should reference the correct services and guarantees you’re providing. What pests are covered and what’s outside of scope? What is your legal guarantee: retreat only or repair? For how long? What are the specific obligations of the customer?”

King agrees, adding that pest management companies should consider writing a separate contract for each service they provide. “It’s important to look at your service offerings and have a specific agreement or contract written that outlines your service as well as terms and legal information.”

Mistake #5: Failing to regularly review and update your contracts.
Rubin says it’s important to consistently review your contracts and make changes that reflect shifts in federal, state and local laws and regulations.
“Our industry is dynamic—not only the development of new products, new technology, or even the reemergence of bed bugs, but also significant changes in state and local laws,” he says. “For example, some jurisdictions require pest control contracts to contain specific language or have specific provisions in a certain font size.”

If you want to avoid unwanted claims, it’s critical to stay abreast of changes in laws and regulations and update your contracts accordingly. “Your local pest control association is often a terrific resource for this type of information,” Rubin adds.

Mistake #6: Neglecting to follow through.
King expresses the importance of following through on promises you make in any contract. “For instance, if you have an agreement for bed bug treatments, and it states that you will provide two or three follow up visits, make sure to provide those visits,” he highlights. If the customer isn’t home, he says it’s essential to document each and every service.

“Legal issues around bed bugs are on the rise, and more and more attorneys are popping up across the U.S. taking on bed bug cases,” he cautions. “Oftentimes, people take the first or second treatment and disappear. These are people who will call back and say you never rid them of their bed bug issue. It’s important to follow your contract or agreement if it states three services. Document, document, document.”

Mistake #7: Using overly complicated language.
When it comes to pest control contracts, Rubin says it’s important to keep the language simple. “Your customers should clearly understand the pricing, the services to be provided, the pests covered and the service guarantees you’re offering,” he adds. “The key is creating a simple contract that adequately protects your company—while being something simple enough that your customers will readily agree to it and sign.”

Set in stone
If you manage to sidestep these common mistakes, you’ll be well on your way to building concrete contracts. But how can you be certain to avoid these potentially disastrous snags? Don’t go at it alone. When it comes to creating contracts, it’s time to bring in the pros.

“Ensure that your contracts are prepared by someone who understands the regulatory environment of the pest control industry in general and your pest control business in particular,” Rubin says. “Be sure to talk to your attorney about how you’d like certain risks to be allocated between you and your customer.”

He adds that there are two key goals when it comes to pest control contracts: First, to memorialize critical terms (customer name, service address, scope, pricing, payment terms, etc.); and secondly, to properly allocate risks between the customer and the pest control company. “Keep in mind we are entering our customers’ homes and businesses to spray toxic chemicals in an effort to treat organisms resourceful and resilient enough to have survived over 400 million years,” he stresses. “So creating a legally binding document that sets out the parties’ rights and expectations is of critical importance.”

By Amy Bell

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