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Murray Gottheil heads up Pallett Valo LLP's Business Law Practice and Family Business Law Group.

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Outsourcing Agreements – What Happens When The End Draws Near?

 

No matter how successful the outsourcing of a core business function has been, when the end of the contract draws near, you want to be in full control of the decision as to whether to renew the contract, take the function in-house or move the function to a different provider.

 

Even if it is your intention to renew the agreement with the existing provider, without options you will have no negotiating position.

So, if you have outsourced an important business function, ask yourself:

  1. Is the provider obligated to assist you to transition the services back to your company or to another provider? Can you easily do it without the existing provider's help?
  2. How clearly are the transition services provided for in the contract?
  3. Do the transition services include the training of new employees, on-site consulting after the contract has ended, assistance with the set-up of equipment, and anything else that you may need to ensure a seamless transition?
  4. Will you have the right to purchase the equipment and software that you will need to operate the business at a reasonable price?
  5. Will you have the right to employ the employees of the provider who are familiar with your business?
  6. Who will own the confidential information and manuals that you will require to operate the business function?

When the contract comes to an end, will you have options, or will you be forced to renew the contract on whatever terms are offered to you, whether or not they are the best terms that might be available in the market?


Murray Gottheil
Pallett Valo LLP

p.s. I'm participating in The Raymond Soroka Business B4 Breakfast Series. It's ideal for busy business owners, click here for more details.


 
Photo by Maureen T. McKay