Those of you who read our recent DC recap noticed the focus on MSAs during the AM PM Diesel presentation during Diesel Connect. Dale and Chase Bowman made MSAs sound pretty darn good—but what are they, and what does that mysterious acronym stand for?
Misplaced Sock Association?
Moonwalking Sloth Admirers?
Magical Stegosaurus Alliance?
Alas, while all those things sound really cool, they are not what the MSA we’re talking about stands for. No, friends, the MSA in question is the Master Service Agreement.
We’ll give you all a moment to ooh and aah.
That MSA is a type of contract you can enter into with a customer—and man, it can benefit your shop. Today, we’ll go over the basics of MSAs, what they contain, and what to look out for. And yes, we’ve even got a free sample MSA for you to download and customize.
So gather your misplaced socks and tell your pet sloth to chill for a while. We’ve got service agreements to discuss.
WHAT IS AN MSA?
An MSA is a type of contract that formalizes the scope of work between your repair shop and a customer. It’s not just what you’ll do for the customer, which is what many regular contracts cover; it also defines what a customer will do on their end. In the most basic of terms, says Fullbay COO Chris O’Brien, an MSA “is where both parties are agreeing to some form of terms where you can hold each other accountable.”
You can build more detail and stipulations into an MSA than you do with a standard contract. Here’s some examples of what an MSA might include:
- An agreement that your shop will pick up the phone when the customer calls—even if it’s at 3 AM.
- An agreement that preventive maintenance will be done on time, or at least within a specified number of days.
- An agreement that even if the customer wants to leave you and go somewhere else, they have to give you some notice (and therefore time to find a replacement customer).
- An agreement that the customer will down the equipment. Chris told us a story of a dispatcher who flat-out refused to down a truck for PM work: “I have 125 routes to ship tomorrow, and I have 125 trucks. I’m not giving [the shop] a truck for maintenance because they won’t get it done in time, and I’ll have 124 trucks for 125 routes.”
- An agreement that you will be the sole vendor for this customer (in other words, you won’t be fighting with another shop they’re using for jobs).
- An agreement that you are going to charge 20% over cost on parts (as an example—fill in the blank there), so if prices go up (yay inflation!), your margin doesn’t take a nosedive.
- An agreement to share KPIs and performance metrics with the customer, usually through a quarterly meeting.
Hmm. Not bad, right? Let’s explore these more.
HOW DO MSAs BENEFIT SHOP & CUSTOMER?
As we mentioned above, a lot of standard contracts focus more on what the shop is going to do for the customer. By giving the customer something to do—and promises to uphold—the MSA takes the shop/customer experience and turns it into more of a partnership.
If you’re dealing with a dispatcher who absolutely will not send you trucks, for example, you can point at the MSA. They’re technically in violation of contract…oh, yeah, and not getting their trucks serviced appropriately can lead to more massive repairs and generally unsafe vehicles.
An MSA allows you to lay out a lot of very specific terms and conditions that will protect both parties. “About 90% of repair shops have three lines at the bottom of their invoices,” Chris says. That’s it. That’s their terms. Do they work? Sure. But why not build as much protection and accountability into a contract as you can?
The MSA makes sure you and the customer uphold your promises—all of them.
IS IT DIFFICULT TO GET CUSTOMERS TO AGREE TO AN MSA?
An MSA doesn’t just protect you and your customer—it also looks really good to big fleets. Larger companies are more accustomed to MSAs, and seeing a repair shop using one can be a big deal.
With that said, there are some parts of the country where a handshake and a basic contract is the norm. And yeah, if you’re a smaller operation and you’re dealing with smaller customers, an MSA may feel like overkill.
Chris also provided some guidance for shops that may not be sure if they want to pursue the MSA route or not. “It’s your reputation [on the line] so you have to be strategic about it,” he says. “If you have work and you have the resources, then you can expand and get into an MSA.”
“If you’re finding yourself with a one-customer lynchpin, where if [a customer left] I would have to fold up shop overnight, I would probably [ask], ‘How would I approach them about getting an MSA in place for 2024?’”
A word of caution: don’t just go barging into a meeting with a customer and declare, “Behold! We shall now operate under an MSA!” Figure out what you want the terms to be. Bring it to the table. “I’m not providing these services to you now, but I want to in the future. This is a new process we’re going through with our larger clients.”
Go into the meeting with the following:
- A list of KPIs and what you’d like to do for the client.
- What you want the client to do.
- What you’re willing to commit to.
- Tacos or burritos (lunch meetings FTW!).
You’ll also want to turn up with a working document or template of the MSA you’d like them to sign, which you can discuss together.
Nice, Fullbay, you might be saying. And where am I supposed to find one of those?
Ask and ye shall receive!
HERE IS AN MSA JUST FOR YOU
Hey, we’re all about providing the people with what they want. We cooked up an MSA template that you can adjust to meet your needs and go over with customers. Our legal team looked it over and OK’d it, but as always, have your own legal eagles check it out before you do anything with it.
In the end, a standard contract is kind of like being in a relationship, while an MSA is…well…kind of like marriage. It’s a deeper, more comprehensive commitment that you and your customer are making to each other—and it’s legally binding.
So, go forth and consider the great MSA and what it can do for you. And maybe find a magical stegosaurus while you’re at it.