Howard Collier

Well into his 51st year as an independent manufacturers’ representative, Howard Collier took the occasion to recall a conversation he was engaged in at the beginning of his career. “Years ago, as a very young man, I attended a MANA luncheon in Cleveland. Situated at my table was a sales veteran who asked me one simple question: ‘What is the highest point of your relationship with a manufacturer that you represent in sales?’ I didn’t know so he quickly answered: ‘When you both sign a contract for sales representation!’”

That question — and more important the answer — have stuck with Collier through the years as today the president of the Collier Corporation, Avon Lake, Ohio, notes that “During our time in business, we have made many mistakes of our own doing, and it took us a long time to learn the need to have counsel from an attorney who specializes in contract law. We’ve paid dearly for those mistakes, but today we will not sign a contract without the review by a professional legal specialist.” He adds that this is even more important today than when he opened his doors more than half a century ago. “When I started, I was alone, but today there are seven of us. I owe it to each of us to be very careful about any agreements we make.”

Collier Corporation is a sales representative agency for United States, South American and European metal producers and metal part and assembly manufacturers. The agency serves North American industry by supplying small test items in large volumes on a continuing basis.

Avoiding Mistakes

Collier says that the mistake many reps make is that they figure they can handle contracts all on their own. “When I did that, I thought I was saving money. I learned the hard way early on that I was wrong.”

To emphasize his point he continues, “I can recall being burned by not having a contract when I trusted the president of a company whom I had known for years. My relationship with the company began when the president of the company contacted me and asked if I would join him for lunch. I thought we were just going to be talking about old times, and I was surprised when the company sales manager joined us. Bottom line, they wanted me to rep the company and I was going to report directly to the president. He asked me what I would accept, I answered and they agreed. They didn’t offer me a contract and I didn’t follow up after the meeting.

“I had worked on rebuilding the territory over a period of two years to the point where I was receiving commissions of $20,000 monthly. Things changed, however, following the president’s retirement, and I was terminated.

“In another instance when a new general manager took over at a company I was representing, the new GM quickly fired a number of his staff — and then me. Finally, he drove the company into a severe strike (they had never had a strike since its origin). Then the owners caught up with him and fired him. However, in the meantime he had caused a lot of destruction.”

Fire-Loaded Contract

Further making his point, Collier notes, “Recently, I received an offer from a large company. Included with the offer was a contract. Thankfully, I decided to have the contract reviewed by legal counsel. After looking over the contract he advised me not to sign it as there were several things wrong with it. When I got back to them with a re-written version of the contract, their response came back to me in an e‑mail complete with a lot of emotional words from the company GM. At the end of his communication, he stated he would get back to me.”

After not hearing something for more than a month, Collier got back to the GM asking if there was any word on a decision. “He replied that vacations, legal work, etc., were holding up acceptance.” More time has passed and still no word. “I figure they are interviewing other candidates and will offer them the same fire-loaded contract they originally offered me. Anyway, I believe any company that takes so long before answering, is not worth representing. So I will decline if offered, even on my basis of contract reply acceptance.”

Citing another example, he says “Surprisingly, we found a clause in a contract offering that made the contract non-exclusive as to the sales territory. According to the contract, with the okay of the manufacturer anyone would be able to claim a customer in our territory. Thus, what resulted was a non-exclusive sales representation in the contract agreement. Our legal adviser has warned us of other problems in the same contract offer and provided suggestions for change. Remember, the contract offer is an offer!

“Be aware and have a professional lawyer review the offer. Be ready, to advise the manufacturer that you have elected to withdraw as a candidate for sales representation. If they will not prepare a sales contract to your requirements, cancel your interest in sales representation. It takes great lengths of time to build industrial sales. Be aware of the value of your time & ability.

“In addition, keep in mind that there are some large companies operating with poor managers. Once you investigate them thoroughly, the problem becomes known and you should avoid them.”

Identifying Red Flags

If concerns over a manufacturer’s reluctance to craft a fair contract or worries over poor management can weigh heavily on a rep, there can be some other red flags, according to Collier.

“First of all, keep in mind handshakes don’t work. In addition, be wary of one-year renewable contracts, for instance,” he maintains. “All reps know that you can spend a year or more working on a line and not make any money. Often it can take two or three years to work into a customer’s business. What if you do all the work, build the relationship and you’re terminated before the business develops? Another thing to be aware of is making sure you have exclusive rights in your territory. You want to make sure your contract ensures that someone can’t come in, claim a customer and gain the benefit of the business. Then there are questions about international business. In many cases, if there’s a dispute, international manufacturers will want those disputes settled in their courts.

“These are all reasons why having competent legal counsel is important.”

He continues, “I’m a firm believer that MANA-member reps exhibit high quality in their method of operation. Why lower ourselves by accepting contracts that are not fair?”

Thanks to MANA

When it comes to locating rep-savvy legal counsel, Collier is quick to direct thanks towards MANA. “In our case, we use Douglas A. Andrews, a specialist in contract law, located in Cleveland. He is one of a legal group that advises MANA members. Our relationship has been excellent. I’d suggest other reps take a contract lawyer to lunch and make your own determination as to the help they can offer.”

If it sounds as if Collier is recalling the adage about the wisdom of regularly changing your motor oil (“You can pay me now, or you can pay me later!”), when he speaks about making an investment in legal counsel, you’re right. But he’s not done with just suggesting where reps should invest. “From day one, I’d recommend that a rep plan on two expenditures when they have an interview with a proposed principal. First, put funds aside to retain a specialist in contract law to review any proposed contract offering. Next, put money aside to cover expenses to travel to and from the potential company you will represent for the purposes of a personal audit of their capabilities. It’s critical that you know ahead of time exactly what a manufacturer’s capabilities are.”

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