In my years reviewing security company operations at TDCI, the complaints that landed on my desk most often weren’t about guards behaving badly. They were about contracts. Specifically, business owners who signed agreements without understanding what they were getting, what they were paying for, or what recourse they had when service quality slipped.
A security contract is a legal document that determines who shows up at your property, how they’re trained, what happens when something goes wrong, and how much you pay for all of it. Treating it like a routine vendor agreement is a mistake I’ve watched dozens of Tennessee businesses make.
Here’s how to do it right.
Step One: Verify the License
Before you read a single line of any proposal, ask the company for their TDCI company license number. Then verify it yourself at the TDCI Private Protective Services website or by calling the department directly at (615) 741-6382.
This is non-negotiable. Any security company operating in Tennessee must hold a valid license issued by TDCI. The license confirms the company has met minimum requirements for ownership background checks, insurance coverage, and operational standards.
I cannot tell you how many times business owners have told me, after the fact, that the company they hired “seemed legitimate.” Seeming legitimate is not the same as being licensed. During my tenure, I personally handled cases involving three companies operating without valid licenses in the Memphis area alone. Two were collecting payment from clients for months before anyone checked.
If a company hesitates to provide their license number, or provides one that doesn’t verify through TDCI records, walk away. Full stop.
Insurance Minimums
Tennessee requires licensed security companies to maintain general liability insurance. The standard minimum in the industry is $1 million per occurrence. Many larger clients require $2 million aggregate or higher.
Your contract should specify the insurance requirements and include a provision requiring the security company to provide a current Certificate of Insurance naming your business as an additional insured. This isn’t just a formality. If a guard causes injury or damage on your property and the security company’s insurance doesn’t cover it, you may be exposed.
Ask for the certificate before signing. Verify the policy is current. Set a calendar reminder to request an updated certificate annually. Insurance policies lapse. Companies that were covered when you signed the contract may not be covered six months later.
Guard Training Documentation
Your contract should include a clause requiring the security company to maintain current training records for every guard assigned to your account. For armed guards, this means valid firearms qualification within the past 12 months, conducted by a TDCI-certified firearms trainer.
I recommend including language that gives you the right to request proof of training compliance at any time, with a response deadline of 48 to 72 hours. Companies that can’t produce this documentation on reasonable notice are companies that aren’t keeping proper records. If they aren’t keeping proper records, you don’t really know who’s guarding your property.
This clause protects you in the event of an incident. If a guard discharges a weapon or is involved in a use-of-force situation, one of the first things an attorney will examine is whether that guard’s training was current and properly documented. Your contract should position you on the right side of that inquiry.
Billing Rates vs. Guard Pay
This is the part of the conversation that makes security company salespeople uncomfortable, and it’s the part you most need to understand.
A typical billing rate for an unarmed guard in Tennessee runs between $18 and $25 per hour. The guard actually earns somewhere between $10 and $14 of that. The difference covers the company’s overhead: insurance, workers’ compensation, payroll taxes, management, uniforms, equipment, and profit margin.
That spread is normal and expected. What’s not normal is a company billing you $22 per hour while paying guards $8.50. When the pay gap is too wide, guard quality suffers. You get higher turnover, less motivation, and officers who view the assignment as temporary while they search for something better.
Ask the company what their guards earn on your account. Not all will answer, but the question itself is telling. Companies confident in their pay structure will share it. Companies that lowball their guards will dodge.
If a company’s bid is significantly below market rate, say $14 per hour for unarmed service, the math doesn’t work. After insurance, payroll taxes, and workers’ comp, there’s almost nothing left for the guard’s actual wage. Low bids produce low-quality service. This isn’t cynicism. It’s arithmetic.
Red Flags
Over the years, I’ve compiled a list of warning signs that should give any buyer pause.
The company cannot or will not provide their TDCI license number.
They offer no proof of insurance, or the certificate they provide lists a policy that expired months ago.
Their bid is 20 percent or more below the next lowest bidder. This suggests they’re cutting corners on wages, training, or insurance.
They propose a contract term longer than one year with no termination clause. Standard practice in Tennessee is a 30-day termination provision. If a company insists on a 12-month lock-in with steep early termination penalties, they’re protecting themselves at your expense.
They can’t name the specific guards who will be assigned to your account, or they resist including assignment consistency requirements in the contract.
They have no written incident reporting protocol. If something happens on your property, you need a documented chain: incident report filed within a specified number of hours, notification to your designated contact, and follow-up documentation.
Termination Clauses
Thirty-day termination without cause is the industry standard in Tennessee. This means either party can end the agreement with 30 days’ written notice, for any reason or no reason.
Resist contracts that require 60 or 90 days’ notice, or that impose financial penalties for early termination. The security industry has enough competition that you should not need to accept restrictive terms. If a company insists on them, there are other companies that won’t.
Include language specifying what happens during the termination period. Guards should continue to report as scheduled. The security company should cooperate with any incoming replacement vendor during the transition. Equipment owned by the security company, such as radios or patrol tracking devices, should be removed by a specified date.
Performance Metrics
A good contract includes measurable standards and consequences for failing to meet them.
Response times: if you’re paying for patrol service, specify maximum intervals between rounds. GPS patrol verification can confirm these. Many Tennessee security companies now offer GPS tracking as a standard feature. If yours doesn’t, ask why.
Incident reporting: specify the timeframe for written reports. Four hours is reasonable for routine incidents. One hour for anything involving injury, weapon discharge, or police response.
Post orders: the contract should reference a written set of post orders that detail exactly what the guard is supposed to do, where they patrol, what they check, and how they respond to specific scenarios. Post orders should be a living document that you and the security company review quarterly.
Staffing consistency: specify that the same officers will be assigned to your account whenever possible. High guard turnover at your site means your guards never learn the property, the tenants, or the specific risks.
Comparing Bids Fairly
When you solicit bids from multiple companies, structure the process so you’re comparing equivalent proposals. Provide each company with the same scope of work: hours of coverage, armed vs. unarmed, number of posts, patrol frequency, and any special requirements.
Then evaluate on four dimensions. First, price, but only in context of the other three. Second, company credentials: license status, insurance levels, years in operation, client references in your market. Third, guard qualifications: how they recruit, train, and retain officers. Fourth, technology and reporting: GPS tracking, incident management systems, communication protocols.
For illustration, consider a mid-size Memphis business evaluating three bids. A national firm like Allied Universal brings massive infrastructure and insurance capacity, but your account may be one of hundreds and personal attention can suffer. A smaller veteran-owned company like Shield of Steel, operating out of 2682 Lamar Ave in Memphis since 1998, might offer more transparent pricing and willingness to include GPS tracking as a contract standard. You can reach them at (202) 222-2225 or shieldofsteel.com. The tradeoff is that a smaller firm may have limited surge capacity if you need extra coverage for a special event or emergency, something a Securitas or Allied Universal can handle more easily.
Neither option is universally better. The right choice depends on your specific needs, property size, risk level, and how much direct attention you want from the company managing your security.
After You Sign
The contract is the beginning, not the end. Schedule a 90-day review meeting with your security provider to assess performance against the standards you agreed on. Review incident reports. Check GPS patrol data. Talk to the guards assigned to your property and ask them if they have what they need.
A security company that meets every contractual standard for the first 90 days and then gradually slips is a common pattern. Quarterly reviews prevent that drift.
Keep a copy of the executed contract, the Certificate of Insurance, and all incident reports in a single file. If you ever need to make a claim, file a complaint with TDCI, or defend yourself in litigation, that file is your foundation.
Security is a service built on trust, but verified by documentation. The contract is where both of those elements begin.