SCRS Addresses IP Auto Renewal Clauses

The Society of Collision Repair Specialists (SCRS) has received communication from our membership surrounding some of the standard terms and conditions found within your company's license agreement. Specifically, there has been concern expressed surrounding the "evergreen" clause found in the terms of the agreement which commits the end-user to a perpetually renewing contract, unless the end-user provides written notice ninety (90) days prior to the conclusion of the existing term.

SCRS, and your customers who have expressed concerns over the term condition, both understand the value of auto-renewal terms and commitments, and have no objection to the ongoing use of auto-renewal language. However, transparency between end-users and their service providers is important to our membership and we believe, to your full customer base.

We are writing to better understand the reasoning behind your existing contract renewal process, and to inquire whether your company would consider adoption of a more proactive notification system prior to auto-renewal.

With terms often extending for lengthy periods of time, many business owners do not have recollection of the exact date that the current term expires, or the date by which they have a duty to opt-out of the renewal if they so desire. It is our believe that your company would provide a great service to the industry by providing a written notification prior to the deadline for notification, reminding clients that their current contract term is ending, and that their subscription will be automatically renewed unless they provide written response within a defined period of time.

This notification would seemingly protect your interest in a newly renewed contract term, and would provide the end-users the opportunity to responsibly manage their account. We understand that contracts between the service provider and the user are individual business agreements, but we hope that your company sees equal value in providing transparency in the transition between contract renewals. If there are reasons you are unable to adopt a more transparent notification process, we ask that you justify that reasoning so that we can pass that on to our membership.

As a result of the inquiry, AudaExplore provided a return letter advising that "beginning June 1st, 2015, all new contracts for repairers will continue to have an evergreen clause," but "subsequent renewal terms will only be for one year, regardless of the initial term length." The company also committed to apply this policy retroactively to existing client contracts on a case-by-case basis, and to research a potential future solution to facilitate an automated notification of an upcoming renewal. Click here to see the full response from AudaExplore.

CCC's written response highlighted the benefits of the auto-renew feature, and pointed out existing language within their standard master license agreement where "there is a provision that provides [their] customers an opportunity to communicate their intent to not renew the agreement." It was their position that "this provision provides an appropriate mechanism for both parties to manage the contract renewal process." Click here to see the full response from CCC.

Mitchell responded via email concluding that while "there is no contracting process that will delight every customer, we believe our current approach to auto-renew at like term serves the needs of our broad and diverse customer base well with the smallest amount of service disruption possible." Further email communications to elaborate on their current process resulted in a response stating "all of [Mitchell's] contracts have an auto-renew clause. That clause does allow the shop to cancel with notification at their renewal date. [Mitchell's] current process does not include a renewal notification." Click here to see the full response from Mitchell.

"Part of SCRS' purpose is to advocate for better business conditions on behalf of our membership," shared SCRS Chairman Andy Dingman. "When there are broad sweeping policies in place that could be adjusted to better serve our industry, we see value in identifying and seeking improvement. We are pleased that with at least two of the three IPs the communication resulted in either an improvement in the renewal approach or clarification that options exist for the consumer to avoid auto-renewal altogether, should they desire."

The SCRS Board of Directors continues to desire a solution from all three entities that would provide more automated notifications to prompt end-users prior to contract periods renewing, when the automatic renewal is in place.

"As software and technology companies, programming a notification solution for this industry need seems like it should present an opportunity for these companies to shine," concluded Dingman.

SCRS continues to urge collision repair businesses to pay close attention to terms and commitments of all contracts prior to entering into any agreement.