Legal Question in Business Law in Maryland
To whom it may concern:
My Name is Andrew
I'm looking to start a business that will connect homeowners with pre-screened, licensed, insured, and qualified contractors. My business will be very similar to the likes of www.servicemagic.com, www.contractors.com, or www.mycontractorlocator.com
My company name would be Everything Home Solutions
The idea of the business is that a homeowner may call my company or visit my website and request to be contacted by 3-5 pre-screened and approved contractors regarding a specific need for the home. The services available on the website would be everything needed for a home. Exterior remodeling, interior remodeling, landscaping, handyman services, plumbing, electrical work, you think of it and you'll be able to find a person on our site who does it.
My concern with starting this business is how I can attract homeowners to my website and company without conflicting with "Salesman" Licensing laws. Under MHIC laws a "Salesman" who have a "Salesman" License are only allowed to represent 2 Contractors. I propose to have more then 2 contractors registered to use my services. Here is how I understand the law as written in the Maryland Annotated Code "Title 8 Home Improvement". http://michie.lexisnexis.com/maryland/lpext.dll?f=templates&fn=main-h.htm&cp Maryland Code file/Business Regulations/Home Improvement/Definitions
DEFINITIONS:
Salesperson.- "Salesperson" means a person who sells a home improvement
(m) Salesperson license.- "Salesperson license" means a license issued by the Commission to sell a home improvement.
(n) Sell a home improvement.- "Sell a home improvement" means:
(1) to negotiate or offer to negotiate a home improvement contract with an owner; or
(2) to seek to get a home improvement contract from an owner.
Since I am not acting as a Salesperson for a contractor, nor am I negotiating or offering to negotiate a contract for a contractor, I do not feel as though my company would fit under this definition. I am simply providing a service for homeowners to request that they be connected to someone who can negotiate a contract, or offer to negotiate a contract. I do understand that number (2) does state that a person is considered to be a "Salesman" if they "SEEK" to get a home improvement contract from an owner. Again, I feel as if my proposed company does not fall under these definitions because I am not seeking a contract. I am simply helping homeowners find good, qualified contractors. In actuality, it would be the homeowner who was doing the "SEEKING" through my services.
I do want to comply with all laws and I do want to operate within those provisions. So, I want to be clear that what I'm proposing doesn't fit under these Licensing laws. So, I'm looking to design my Business Model outside of any gray areas that may exist with the law and what I propose. The following are the exceptions for persons required to have a "Salesman" License. These exceptions are located in the Maryland Annotated Code "Title 8 Home Improvement". http://michie.lexisnexis.com/maryland/lpext.dll?f=templates&fn=main-h.htm&cp located in the Maryland Code file/Business Regulations/Home Improvement/License required, exceptions.
Salesperson license.- Except as otherwise provided in this title, a person must have a salesperson license or contractor license whenever the person sells a home improvement in the State.
(d) Exceptions.- This section does not apply to:
(1) an individual who works for a contractor or subcontractor for a salary or wages but who is not a salesperson for the contractor;
(2) a clerical employee, retail clerk, or other employee of a licensed contractor who is not a salesperson, as to a transaction on the premises of the licensed contractor;
(3) a solicitor for a contractor who calls an owner by telephone only;
(4) an architect, electrician, plumber, heating, ventilation, air-conditioning, or refrigeration contractor
From what I understand, a solicitor who contacts a homeowner by telephone is not required to have a "Salesman" license.
So as long as a Homeowner "SEEKS" my services through my website, or calls my company, I would not need a "Salesman" License. Furthermore, I should be able to advertise or promote registration to my website by Magazine Advertisements, Fairs & Festivals, Home Shows, Craft Shows, Social Networking, and Internet Advertising. Part of the registration process would be to provide a phone number and agree to be contacted by my company and contractors. This would be phone soliciting and would not require a "Salesman" license.
The goal of my company is to provide small to medium sized contractors with the ability to be connected with homeowners who need there service. It's also to connect homeowners with qualified, pre-screened contractors who have the homeowners best interest in mind. There is no charge to the homeowner for registration to my website or for calling my company to request service. However there will be a charge to the contractor for using my services. Please also find below the "Terms of Use" agreement I plan to have listed on my website that homeowners agree to when registering on my site.
Would it be in your best opinion without your opinion being viewed as legal advice, that I could conduct business in this manor and not need to have a "Salesman" License?
Thanks,
Andrew
3 Answers from Attorneys
Hi Andrew. Good job on the legal research and analysis you've accomplished above. That's not an easy task! Despite your work educating yourself on Maryland laws, my advice would be to hire a Maryland transactional attorney to conduct the necessary legal research and discuss your legal position regarding the need for a salesman license. You may not ultimately hear the answer you want, but at least you will have done your due diligence before you begin this journey. If you would like my assistance, please feel free to contact me using the contact information set forth on the LawGuru site.
Best of luck.*******The above is for informational purposes only and does not create an attorney-client privilege.*******
The other attorney is right on point here. This is not a simple bulletin-board question. You may have various options that will arise only after careful and reasoned legal research and analysis. Consult with a good business attorney in your area for specific advice.
Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.
Franchise Attorney
You are asking good questions, but as the other attorneys noted your venture would benefit from specific legal advice and an attorney review (or drafting) of your customer and client contracts. Among other things, you will want to consider what type of entity to form, check availability of your proposed trade name, design contracts with both the website users AND the home improvement contractors to clarify your role (and to avoid the problems with licensure you already have identified). My law firm helps new business start ups in Maryland and offers a free 10 min initial phone consult if you'd like to contact Arden Law Firm at 410-216-7000.
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