COPIER CONTRACTS | 7 MIN READ
Depending on the dealer or manufacturer you have chosen to do business with, you may not be as in love with your machine or service as you thought you'd be. As a result, you're looking to get away from the nightmare that has become the relationship between you and your service provider. But when you attempt to rid yourself of the headache and start over, you discover it's next to impossible to cut the cord.
So, what can be done to get out of your copier contract, and why is it so difficult to do so?
In this article, we will discuss some of the finer points of copier contracts, answer commonly asked questions, and clue you in to some of the strategies that dealers and manufacturers use when setting up your initial agreement.
As a copier dealer, why would we do this?
Standard Office Systems is one of the largest Canon and Sharp copier dealers in the southeastern United States and we try to build our customer relationships on trust. As a result, we attempt to provide transparency and answers to any question a customer may have; even if that answer doesn't make our industry look the greatest.
RELATED: How Do I Cancel My Copier Contract?
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The Difference Between Leasing, Renting, and Buying
When it comes to acquiring a multifunction print device (aka copier), there are generally three different ways you can enter into an agreement, and they all have their advantages and disadvantages.
Buying a Copier
Buying a copier outright is the easiest one to understand. The dealer/manufacturer gives you a quote on a machine with the features/add-ons required, and you purchase the machine with cash. At that point, you own the machine and there isn't an ongoing agreement with a leasing company to make payments.
The advantage to doing this is that you have incurred all the purchasing expense upfront and will not need to make payments.
The disadvantage is that copiers are evolving, just like any form of technology. Most organizations are not interested in having five-plus year old technology sitting around the office.
Network security can become compromised and the quality of prints can deteriorate to your competition as they continue to use newer/better equipment. Additionally, service costs tend to rise as a machine ages because it costs the service provider more money to keep it maintained.
Leasing vs Renting
The most common copier purchase it entering into a lease agreement, though it is important to note that you are still purchasing the copier in a lease agreement.
Nearly every lease agreement is binding to the term of the agreement. This means that if you choose to stop using the machine, the remaining lease payments are still owed on the equipment. If your service contract is separate, though, you should be able to cancel the service on the machine, even if you still owe on the lease.
A copier rental is at a much higher monthly cost than leasing, but in this case, you can cancel at any time (based on the terms of your agreement). This is good for a company that doesn't spending the extra money so that they can avoid being locked into the purchase of a machine.
RELATED: Should I Lease or Buy a Copier?
Differences Between Leasing and Service Contracts
Before reading further, ask yourself if you signed multiple agreements or just one when you setup your copier lease.
As discussed above, a lease is an agreement to purchase a machine through manageable monthly payments. If you were to lease a machine till you own it, you effectively are paying more for the machine than if you purchased it out-right (typical of most financing programs).
A service contract is an agreement with your service provider (dealer or manufacturer) to provide regular maintenance, supplies, and repair of your machine. These contracts often provide a 30-60 day notice clause for cancellation, in writing.
Make sure you understand your service cancellation policy and the procedure to do so, or you may end up stuck with service for an additional month after you want to discontinue.
The Differences Between the Two Agreements
At Standard Office Systems, we have the luxury of providing in-house leasing to our customers. This offering is rare, and most dealers use third-party leasing companies for this service (we do this, as well, but the option of in-house leasing is great for customers who may not qualify with a third-party).
Some organizations that use a third-party leasing company to finance their machine(s) sometimes fail to recognize that their leasing and service contracts are through separate entities.
This means that if you are unhappy with you copier service, you may still be bound to the machine that you are leasing. The lease agreement is with the financing company, not the dealer or manufacturer. In fact, it is illegal for your current dealer/manufacturer or your new one to move the machine from your premises without the permission of the leasing company.
As frustrating as that sounds, the only way to terminate a lease agreement early is through the leasing company - and that is very difficult to do.
Service agreements on the other hand are relatively easy to terminate. Most require notice between a 30-60 day period, and that's it!
So, what are your options?
If you've cancelled your service contract and still have payments left on your lease agreement, then you still have to pay on your lease (even if you no longer wish to use the machine). If you do wish to keep using the machine, but just need service, there are often dealers within your area who are able to service the same machine.
Your options will be limited on which dealer you can choose, because it will need to be a dealer that already services that brand of copier.
But what about manufacturers?
It makes sense to reach out to the local manufacturer to get service if you are unhappy with your dealer, but you aren't likely to get the result you seek. Why?
Manufacturers make their money through the selling of their equipment, not their service. So, it is likely a manufacturer would lose money on its service or need to charge you a higher service fee than normal to make any money. They simply aren't likely to be interested in the business.
Additionally, manufacturers are limited in the money they are able to spend on the service side of their business (often because of needing to meet quarterly benchmarks to appease shareholders).
We go into more detail about the differences between copier dealers and manufacturers in another blog.
In some cases (like when your contract has fewer than 24 months remaining), you may be able to get a new service provider to assume the cost of the remaining lease payments by opening a new contract with them. This is known as a "buyout" and we go into that more in a different blog.
RELATED: What is a Copier Buyout?
What to Look for in a Copier Contract
To avoid contract issues in the future, look for these things in your agreement:
- Ensure you lease agreement and service contract are not rolled into one payment (buyers often do this because it makes billing more simple, but it also will lock you into a service contract for the duration of your lease because the two are intertwined).
- Make sure the equipment you are purchasing is comparable when comparing contracts (to get the lowest price, many dealers will substitute used equipment or remove certain add-ons you may need).
- Do service fees escalate? It is often that copier service contracts increase in price as your machine ages. This is often because it is more expensive to service a machine that is older.
Make sure you understand the service cancellation policy. Contracts are often designed to intentionally be complicated in their language. It is in the best interest of the dealer to keep you happy, though, so don't be afraid to ask questions.
Speaking of questions, should you have any additional contract-related questions, or have a different question, reach out to us by leaving a comment below or by clicking the button.
Posted by Bryan Ammons
Bryan Ammons is the President and Owner of Standard Office Systems of Atlanta where he began his career as a part-time employee in 1973. SOS is a leading provider of office technology including managed IT services, copiers, printers, and business phone systems. Bryan has served on the board of the Copier Dealers Association for 11 years, including two as President. Additional, he served on the Dealer Advisory Councils of HP, Ricoh, Sharp, US Bank, and Great America Leasing.