We are generally not open to considering opt-outs outside of ENT deals, and only then as a last give to get a signature.
In the instances where we are open to an opt-out, there are three basic kinds that we can consider:
- Option 1: Flat Opt-Out Window We give them a specified window (say 60-90 days before Year 3 starts) where they can provide written notice to terminate the remainder of the contract. They pay through the notice period and then they're done. This is a clean approach and mirrors what we did with LiveNation (although that deal had/has its timing complications so our path there shouldn't be our default) - gives them the flexibility they want while ensuring we get two full years of committed revenue.
- Option 2: Performance-Based Opt-Out They can only opt out if we fail to meet specific, documented conditions like critical system integrations, agreed implementation milestones, or core product functionality requirements. We'd define these triggers upfront in the contract. This protects them if we genuinely don't deliver while preventing them from walking away arbitrarily just because their business priorities changed.
- Option 3: Limited Product Opt-Out The opt-out applies only to specific SKUs or seat counts above a baseline. For example, they must keep CRM and Scheduling at X seats, but can reduce or eliminate Sourcing and Talent Compass add-ons in Year 3. This keeps our core relationship and revenue intact while giving them some ability to scale down if certain products don't stick.
The use of opt-outs in customer contracts requires the approval of deal desk and sales management. Please start a post in the #sales-success-legal Slack channel before adding this language to the Contract Notes section of the order form.
Following is the basic clause that we can customize for each use case:
Customer has a one-time option to terminate this Order Form by providing written notice to Service Provider no later than [
insert date and time PT
] (the “Termination Option”) which includes the termination date which can be no more than 30 days removed from the notice date, in which case this Order Form shall terminate on the designated date.
If the customer is being granted an opt-out option for the second year of a two year deal:
Customer has a one-time option to terminate this Order Form by providing written notice to Service Provider no later than [
insert date and time PT
] (the “Year 2 Termination Option”), in which case this Order Form shall terminate upon the expiration of the subscription term for Year 1 on [
insert date
] and the fees set forth in this Order Form for Year 2 shall not apply.
- We are generally not open to considering opt-outs outside of ENT deals, and only then as a last give to get a signature.