It’s a timeworn and oft-repeated tale that independent manufacturers’ reps are familiar with.

It goes this way: the rep signs on with a manufacturer to establish their brand, market and ultimately sell their products. The rep moves ahead with the pioneering work, develops the territory and completes all the ground work to establish the brand—all with the expectation that commissions earned will be commissions paid.

What’s the payoff? Commissions earned were commissions denied.

Normally this tale comes from the automotive, electrical, electronic, or some other industrial sector, but this time the scenario—or scenarios—grew out of the fashion apparel industry.

Consider the experiences of Amanda Parenti, owner of The Green Room NYC, in New York City. Parenti explains that as the owner of her own business, she has relationships with a number of manufacturers and designers. “Basically, I do everything that has to be done to bring their products to market. I’m involved with merchandising, sales, pricing, logistics and special orders. I’ve also gotten into the public relations end of the business for emerging brands.”

As reps in so many other industries, she represents multiple brands. “I have contracts with all the brands that I work with. Historically those written contracts haven’t been all that intense. There isn’t a lot of dotting of the i’s or crossing the t’s. Eventually, however, I worked out a more complete contract with the assistance of an attorney experienced in our industry. It’s worth noting that since designers and manufacturers haven’t been all that experienced with more complete contracts, I generally scare them when I present mine. They do sign it, however.”

Problems Remain

Irrespective of the fact that there is a written contract, problems still occur, according to the rep. “For instance, I helped one company launch their brand so successfully that in a period of 18 months, we went from zero sales to $1.2 million.” That was the beginning of the problem.

Parenti continues that her responsibility, according to the contract, was to grow the brand and get the orders. Having done that, it was then up to the manufacturer to handle all the production and delivery logistics. “There was a clause in the contract that I was guaranteed commissions when the orders were booked, not when they were shipped. In addition, I was entitled to at least 75% of the commission even if the manufacturer couldn’t deliver the product. And that’s just what happened. After I put all the work in, they refused to pay me what amounted to $68,000 in commissions.

“I sued on the basis that they broke the contract and, in fact, they broke off the relationship they had with me prior to a major selling season. They pulled the orders from me and took all the orders for themselves—thereby eliminating the rep. Eventually we settled out of court basically because I ran out of money trying to pursue it legally.”

With that as her experience, Parenti is asked if with the benefit of hindsight she might have some advice for other reps in the fashion industry. “Unfortunately,” she says, “the law seems to protect those who have the most money. If anything, I’d advise a rep to make sure they had an ironclad contract with their manufacturers. Be sure all the duties and responsibilities are explicitly spelled out.”

But even before that, she maintains there’s something a rep should do: “Learn all you can about the individuals you’re going into business with. On top of that, make sure you have professional legal counsel before you enter into any contract.”

Working a New Line

Here’s what can and did happen to another rep who was representing what she called a “fledgling” line. Dina Gardner, Height Sales in New York City, explains that she got one line complete with sample products and began selling. “We did all the work we were supposed to do and started getting orders. It didn’t take long for us to see the commissions weren’t being paid in a timely fashion. I asked about the delays and was told ‘Times are tough, but it’s coming,’ or “If the stores don’t pay us, we can’t pay you. Just be patient.’

“My response to that was, ‘I’ve done all that I did in good faith. Now, it’s all about survival and I’ve got to be paid in order to survive.

“Finally this manufacturer stopped paying me altogether. For several months, they made every excuse, everything from disputing the amount of commissions that I was owed, to questioning whether I deserved it, to claiming they didn’t have the money to pay me—even though the overdue commission was for goods that had already been shipped—goods that they had already received payments on.

“When I appealed to the manufacturer’s sense of what was right and in good faith, beyond what was written in our contract, It was of no use. They never paid me a dime.”

Asked the same question Parenti was asked concerning possible advice to other reps, Gardner’s response is “I wish I knew. I wish there was some sort of recourse for these manufacturers’ actions. Where is the accountability? Perhaps laws and contracts have to be stricter. I actually had a contract that was fairly thorough and decent and had been reviewed by an attorney. But when all is said and done, I’m not sure the law is really on the rep’s side.

The Legal View

Lema Khorshid is anything but a stranger to tales such as these. In fact, Khorshid, an attorney with Fuksa Khorshid, LLC, Chicago, Illinois, says that the difficulties described above illustrate how similar rep experiences are in the fashion industry compared to other industries. “While their experiences may be more similar than dissimilar,” she explains, “a major difference in rep-manufacturer relations in the fashion industry resides in their contracts. If anything, there’s a tendency in the fashion industry to not memorialize terms in the contract as thoroughly as other industries do. In addition, a good deal of business is conducted with handshake agreements.”

Khorshid, who deals extensively with fashion/apparel-industry reps, explains “As you consider other industries that use reps, you’ll see that their agreements often are more complete and detailed. Not so with fashion designers, their manufacturers and their reps. Keeping in mind that the world of fashion is populated with entrepreneurs who venture forth with very little money, difficulties can arise. Since the fashion industry is so seasonal, it’s not unusual for these people (e.g., designers and manufacturers) to attempt to get things done in a hurry. They don’t always have the funding or the time to allow them to get things done properly. And, many times agreements may be struck on the basis of a handshake. Added to that is the fact that when written contracts do exist, they often aren’t taken seriously. As a result, we hear of the problems that reps encounter.”

Preventing Problems

Khorshid continues that there’s obviously “pre-work” that must be done ahead of time if reps are to head off problems before they occur. “In an effort to limit the risk a rep takes, the individual should do all they can ahead of time to learn about the person they’re doing business with.” She advises reps:

• Don’t just look at the line and make a decision that it has potential based on whether or not you “like” it.
• Make sure the manufacturer has a viable business that is well thought out and adequately financed.
• Make sure that they are able to meet production and delivery deadlines so that you can rely on them to meet your buyer’s expectations and not taint your relationships.
• Memorialize any deviations to your agreement in writing and keep a paper trail of everything.
• Learn all you can about their reputations as business people.
• Seek legal counsel from someone who has industry experience—the fashion apparel industry has certain terminology and a number of nuances that may be different from other industries. That’s why it’s important to work with an attorney that understands these nuances and appreciates the fact that the industry is seasonal. It’s a little like riding a roller coaster for the first time. When you take that first trip, you want to be sure there’s someone on the roller coaster who’s done it before.
• Move forward with a written contract.

Agreeing with Korshid that it’s wise for reps to have someone in the seat with them when they’re dealing with designers and manufacturers, Jerry Leth, MANA’s Director of Membership, explains that he has been in communication with the attorney on the very matters discussed in this article. “Since there is no industry-specific rep association for fashion/apparel reps, MANA is working to create products and services that can address the unique challenges that they face. Similar to what we’ve done in the past for capital equipment reps with the creation of the Capsig group, it’s possible that as the number of fashion reps gravitating to MANA increases, the more services we can provide them.”