Accidental Automatic Renewal
Accidental automatic renewal of a Regus contract can drain your finances. Anyone who has experienced this will agree that one of the most prudent things you can do when you enter an agreement with Regus is set up procedures to help avoid all of the sneaky fees Regus tries to hit you with. And in the specific case of the Regus auto-renewal clause, that means scheduling an automatic notice of termination to be sent to Regus prior to the renewal deadline.
...which you can do right now for free.
Free for Regus customers only.
One of Several Sneaky Fees
Automatic renewal, the "business continuity" fee, the beverage fee--whether you are the business owner or the office administrator, if managing your company's Regus contract is your responsibility, then you should be familiar with every type of "hidden" fee for which is Regus infamous. Don't leave this to the attorneys.
Sure, you could ask your attorney to review your Regus contract and identify any potential pitfalls. But when you hire your attorney to do this for you, what you typically will get in return for the billable rate you pay is simply advice: "watch out for this," "this is what this means," etc. In other words, administration of that contract is not something you would typically hire a business attorney to do. The reason for this is simply pragmatic: if your business maintains 10-20 contracts with various vendors at any given time, then imagine what your ongoing fee would be if you were to hire your attorney to "manage" each of those contracts on an ongoing basis. The monthly bill would be huge, and for this reason, even your attorney knows that this is not a good use of your legal budget.
Bottom line: since your business will be the one most affected by the sneaky fees Regus imposes, then advice from lawyers should be just that: advice, not the final word, and not a replacement for having procedures in place to ensure that the contract is properly managed and that its details and deadlines are thoroughly understood.
What Does The Regus Automatic Renewal Clause Say?
Here is a screenshot of the Regus automatic renewal clause (and, for context, the cancellation clause that immediately follows it).
First, if you are not accustomed to reading legalese, then you might be wondering what this means. I will give you my interpretation using a hypothetical example (disclaimer: I am not your attorney and this is not legal advice). Let's say that you are in a 24-month agreement with Regus and that you wish to terminate the contract at the end of the term. Given the two clauses pictured above, what is the procedure you must follow? Start at the contract's end date (which you can typically find on the Online Office Agreement document under the Service Provision section), and count back three months. That is your actual deadline for giving written notice of termination, not the contract's end date. This is the part that gets most people, resulting in inadvertent auto-renewal and a bill for, say, an extra $20,000 for an unplanned 24-month extension that you were not planning to use. Ouch.
Second, what does the automatic renewal clause not say? It does not say that Regus will send you any reminders of this or any other deadline for opting out of one of Regus's several hidden fees--which seems strange, right? It depends on your perspective. If you tend to take the customer perspective, then you might emphasize things like...
- "I have been a loyal Regus customer for 10 years."
- "I have always paid my Regus bills on time."
- "I have recommended Regus to many colleagues."
- "Certainly Regus would want to preserve that customer-provider goodwill that we have both cultivated over time."
- "And certainly Regus would not want to ignore all of those good things I have done for their business by trying to shake me down when I eventually decide to leave."
Conversely, if you are Regus, then your perspective seems to be something like...
- "I do not care about customer retention; I care about billable entity retention."
- In other words, I only care about forcing as many businesses as possible to pay us at least one more time, regardless of whether we are exchanging value or not.
- Therefore, if we can slip several sneaky clauses into our contracts, then we can maximize our opportunities to bill business 2-3 more times even after they have ceased using our services and regardless of whether they have already fulfilled all of their face-value obligations of the contract, like having made 24 lease payments for a 24-month contract.
- And so long as we keep opening new locations at a fast enough rate (there are over 3,000 global Regus locations now), then we stay just a few steps ahead of the tidal wave of consequences we create by consistently ruining our relationships with one former customer at a time.
This is why Regus seems to hope that you forget about the auto-renewal deadline, and this is why you might not ever receive a reminder from Regus about this deadline.
The Hazards of a Hospitality Agreement
Staying on this point of Regus not sending you reminders of upcoming auto-renewal dates, let's look at the type of agreement you have in place with Regus--because it matters.
In most jurisdictions in the US, there are statutes that obligate landlords to give tenants these kinds of important reminders--in some cases, even multiple reminders. This is the law's attempt to protect unsuspecting tenants from unscrupulous landlords who might otherwise bury these kinds of hidden fees in the contract. And for the most part, these laws are effective and prevent this kind of abuse by landlords. Why then is Regus able to get away with this so widely?
Technically, in most cases, the agreement you sign with Regus is not a lease agreement. Instead, it is something called a "hospitality agreement." "Wait, but I am the tenant, and Regus is my landlord." Not technically. Technically, Regus is the tenant. Regus rents a floor or building from the building owner, and then re-sells the space to Regus customers, and--this is the key point--Regus customers are neither tenants nor sub-tenants. This allows Regus to sidestep any of those landlord obligations that the law imposes, like sending a certain number of auto-renewal reminders, in a certain way, a certain number of days in advance of the deadline.
"Can't I just put a reminder on my calendar?"
Your only protection against the Regus automatic renewal clause is putting a procedure in place that ensures your decision to stay or leave Regus at the end of your current term is documented by a written notice you deliver to Regus prior to the auto-renewal deadline.
There are probably two types of businesses that get hit with inadvertent auto-renewal: those who had no clue that there was a termination deadline and those who forgot. And--this might surprise you--many of the businesses in the latter bucket are law firms, the people we hire to help us organize around the right procedures for our business, the people who might, for example, advise you to put a reminder on your calendar to make sure that you give sufficient advance notice of termination. Yes, you could totally avoid being automatically renewed by Regus if you...
- Know that there is a deadline for giving written notice of termination.
- Know what that deadline is.
- Remember to give written notice.
- Give written notice.
- On time.
Forgetting any of these steps will cost your business thousands of dollars (I know, because I was a Regus customer for almost four years, and I have learned this firsthand; it sucks).
I kept forgetting, so I built a tool to automatically send Regus notice of termination prior to the deadline
I built this tool to automate sending a notice of termination to Regus to prevent surprise auto-renewals, and I am opening it up for others who share my pain. Current and future Regus customers are all encouraged to use it for free, and as more people...
- schedule your notice of termination
- to be automatically sent to Regus
- on-time and without having to keep track of the deadline
...then maybe Regus will suddenly find it less lucrative to try to surprise people with auto-renewal on their way out the door.
I estimate that around 27% of churning Regus customers get stung with some form of inadvertent auto-renewal, which, if you are on a 24-month agreement, could mean an extra $10,000 to $20,000 expense, that you were not planning to pay, for something you were not planning to use.
(source: just Google "regus auto-renewal").
As we all know, Regus can be tough to deal with sometimes, which is why I am happy to offer this tool for free. Frankly, I think this is the type of "stand up to Regus" activity we need to see more of.
If interested, simply click the button below and sign up.
How does it work? Enter your contract start date and end date, and the tool will automatically schedule your written notice of termination to be sent to Regus prior to your renewal date. Plus, it will send you automatic reminders leading up to that send date (which you can turn on or off as you wish), and it will let you cancel the notice of termination any time you like. So in essence, once the notice of termination is scheduled, it turns renewal into an opt-in decision rather than an opt-out decision, which is how I think it should have been to begin with.
What if you decide not to terminate after all? In any case, even if you decide to stay, giving Regus this valid notice termination should give you way more leverage to negotiate a much better renewal rate rather than the vague "prevailing market rate" that the contract describes--whatever that means. So given that we are opening this up to others to use for free, there really is no good reason to not use it and risk being inadvertently auto-renewed.
Last thing: this is a nationwide effort, so feel free to pass this on to others in your network.