He noted, "The customers are locked into five, eight, 10, or 12 years, and no one else in our market can offer that.

"This assumes that each customer has an exclusive maintenance agreement with us. Customers are covered for everything except an act of God."

Jackson said that extended warranties were becoming a concern for him because his company wasn't making any money on the repairs. "How many times is a customer going to pay you to replace a free part?" he asked.

Jackson said he wanted manufacturers to include routine maintenance in their extended warranties, but they said no. He decided to go with a third party. "We wound up dropping manufacturer's extended warranties and signed up with Equiguard. We built up our customer base, and then the manufacturers changed the rules of the game."

Rodenhiser said that his company is working with a local school, whose administrators want extended warranties on all of the HVAC equipment. "Everyone's mindset is now on maintenance and extended warranties," he said.

Jackson said it is "win-win to package an extended warranty with a maintenance agreement."

Busby likened the maintenance agreement features to those offered by a dentist. "When we leave the dentist's office, we automatically schedule another appointment for six months later," he said. "Then the dentist follows up with a reminder call."

Publication date: 01/19/2004