The Blank Check* — Part IIBy Charles Cohon
Part one of “The Blank Check” appeared in our last issue. Just to recap:
The early morning caller was a manufacturers’ representative. He sounded panicky, and I quickly discovered that his panic was justified.
“About 15 years ago I signed a rep agreement with 30-day cancellation terms. And for 15 years I kept growing that principal’s sales, and never gave it another thought.
“Yesterday I found out that I’d been terminated and that all the commissions I would have received for customers I’d closed over the past 15 years will end in 30 days. This is my #1 line and it’s 50 percent of my income. What can I do?”
In our last issue we discussed a manufacturers’ representative’s options for that principal. We also promised to suggest ways to try to negotiate extended post-termination commission into contracts that have already been signed but have not yet been terminated.
Is that really possible?
Yes, there are occasionally brief windows of opportunity when you can get improved terms written into existing representative agreements. But they generally occur only after a manufacturer has given you other bad news, and that window may be open only for a few days.
What kind of bad news? Most often it’s a phone call or e-mail that does not announce a termination, but does cut the manufacturers’ representative’s income. For example, it could be a commission percentage reduction, a reduction in the manufacturers’ representative’s assigned territory, or taking one or more of the manufacturers’ representative’s accounts as house accounts. (In every instance where manufacturers’ representatives have reported these situations to me, by the way, the manufacturer was not a MANA member!)
If an attorney’s review of your agreement doesn’t reveal any ways to get that unwelcome change reversed, don’t give up. Instead, negotiate for something else to make up for what you’ve lost.
- Commission rate reduced? Negotiate for extended post-termination commissions, life-of-part/life-of-program commissions, additional sales territory, or to convert a current house account into a commissionable account.
- Lost part of your territory? Negotiate for extended post-termination commissions, life-of-part/life-of-program commissions, or to convert a current house account into a commissionable account.
- One of your accounts is now a house account? Negotiate for extended post-termination commissions, life-of-part/life-of-program commissions, or additional sales territory.
Remember, if you have to give something, try to get something. A manufacturer who originally hired you for your negotiating skills shouldn’t expect anything less!
* Your legal recourse for a signed blank check may be better than your recourse for a badly written contract. This column is not legal advice; for definitive information, consult your attorney.