Three Things to Consider When Qualifying an Additional Business
It is becoming more common for contractors to consider using their license with more than one business and becoming a qualifying agent for multiple companies. While this is legal when done properly, there are a three important considerations for any contractor considering serving as a qualifying agent for additional businesses. And each of these should be considered, discussed, and agreed upon by the parties before applying to become a qualifying agent so that any corporate entities can be properly established and agreements in place before the license is issued or work begins.
1. Follow the Proper Process to Become a Qualifying Agent.
There really is only one right way to legally become a qualifying agent for a company. We’ve written about that before here, but in general, you need to go through the formal process established by the DBPR and Construction Industry Licensing Board for apply to serve as a qualifying agent for an additional business and have that application approved before you start operating the additional business. While this may be the last step in starting work with an additional business using your license, it is one of the most critical to get right. Further, the other two considerations in this article feed into the information to be supplied on the application, so while it’s number one, on our list, it is actually the final step in the process.
While it can be tempting to try to short circuit the process or start work while the application is pending, you should avoid that. The penalties for engaging in contracting without properly becoming a qualifying agent for a company can and often are severe and significant.
2. Establish How You will Properly Supervise The Work of the Additional Businesses.
One of the key items that the relevant licensing Board will evaluate in determining whether to approve an application is whether and how you will adequately supervise the work of your current business and your proposed additional business(es). Will you physically drive by job sites regularly to check on the progress? Will you be present for inspections or other key milestones? If projects are spread across multiple geographic areas, how often will you visit them? Will you use electronic devices, apps, video, or pictures to monitor progress? Will you have project managers who regularly report to you? What type of documents or information will you want the additional business to provide you on a regular basis?
All of these are questions and options you should think through and discuss with any other participants in the new business. Not only will this strengthen your application, but it will also make sure that you have practical tools available to you to ensure you can stay on top of the work being performed by the additional business once your application is approved. It also will help ensure you have the processes in place to ensure the work is being performed properly, which will help minimize problems or licensing complaints in the future.
3. Have a Written Employment or Qualifying Agent Agreement.
Once you determine how you will supervise the work of your additional business, you should enter into a written employment, operating, or qualifying agent agreement to document your responsibilities, the additional businesses responsibilities, and what happens if something goes wrong. This agreement should also spell out the licenses you will be using with the business, your compensation, and any special insurance, reporting, or indemnification requirements you want in place. While Florida’s statutes impose multiple requirements on you as a license holder, unless you have a contractual right to certain information, processes, procedures, or conduct by the additional business, it may be difficult for you to actually get what you need to stay on top of the business’ operations. Taking the time to put this in writing, and regularly revisiting it to make adjustments as necessary is always worth it in the long run. Further, under certain circumstances, if you fail to put the agreement in righting, you may end up without the ability to enforce some or all of its terms. Make sure to consult with an attorney to develop an agreement that will properly reflect your needs as a licensed contractor and the goals of the additional business.
Interested in learning more about qualifying an additional business? We can assist you with the entire application process and putting together the appropriate agreements to support it. Many times we can do this for a flat fee. To learn more, please fill out the form below, or please contact me at jason.lambert@hwhlaw.com or (813) 227-8495.
About the Author:
Jason Lambert is a Florida Board Certified Construction Attorney and Partner in the Construction Industry Practice Group at Hill Ward Henderson, in Tampa, Florida. He is also the founder and chief contributor to the Hammer & Gavel construction law blog. Jason focuses his practice on representing contractors, subcontractors, and materials suppliers throughout the state of Florida. Before law school, Jason spent a decade working in the construction industry, primarily as a project manager and operations director for both new construction and remodeling. He can be reached at jason.lambert@hwhlaw.com or 813-227-8495.
