Several years ago MANA spent considerable effort to create the Manual for the Creation of a Rep-Principal Agreement. The New York/New Jersey MANA chapter instigated the effort and the MANA attorney members donated considerable time to put it together. We updated the manual last year. We intend the manual to educate members on what needs to be included and the importance of each clause. We strongly recommend you retain an attorney that understands and knows the rep business to review the agreement before you sign it.

Why does MANA take this position? What’s wrong with a simple agreement? When reps and manufacturers meet and want to create a relationship, they follow multiple steps before they reach final agreement. When they first meet, the trust level is neutral. During the due diligence process, the trust level grows or the discussions cease and parties go separate ways. By the end, the trust level may be so high that the parties feel they can proceed with a “handshake.” At the time the parties first reach an agreement, the financial impact is minimal.

Fast forward 10 or 15 years. You, the rep, have grown the business to the point they send you hundreds of thousands of commission dollars a year. For whatever reason, and there are many, the principal decides to terminate the relationship. How you and the principal worded the agreement you signed today significantly impacts who ends up with the money. You purchase insurance to protect yourself for unexpected events. Why not invest in an attorney today to protect what you earn in the future?

Earlier I mentioned our recommendation for those asking for a “simple” event. My guess is, the professional reps would go through any of the sample agreements and conclude to delete little, if anything.