How Signing a Sales Representative Agreement Is Like Buying a House


Imagine you are buying a house. Let’s say it costs $400,000, so you put down 20 percent and get a mortgage for the rest. You renovate the kitchen. House prices go up. Three years after you bought the house, it is easily worth more than $500,000.

Would you buy the house and renovate the kitchen if the seller could take back the house on 30 days’ notice? Of course not. For most readers, this question will seem rhetorical.

Now imagine you take on a new line. You train your sales force on the products and spend time introducing them to … Read the rest

Do Not Lose Your Commissions

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You just received a representative contract from a potential new principal. The product line looks like a winner. You read the contract. You look at the territory, the commission rate, the length of the contract, and the reasons for early termination. You may also look to see if you are to be compensated if the principal undergoes a change of control. Hopefully, you look to see if there is a non-competition provision that prevents you from selling competitive products while the contract is in effect and after it ends.

Another provision that should be carefully read is the one that … Read the rest

Change of Control: How to Make Your Business More Valuable by Planning for Your Manufacturers Being Sold


In the 72 hours before I sat down to write this article, the owners of three different sales representative agencies called me with concerns because one of their manufacturers was being purchased. These acquisitions often take sales representatives by surprise, asking themselves what rights they have and what will happen next.

What to do and not to do when one of your manufacturers is sold will be the subject of a future article for Agency Sales. But the purpose of this article is to get you thinking about how to anticipate the possibility of your manufacturers getting sold, plan … Read the rest

When the Hand That Feeds You Bites


Dealing With Conflict With Your Current Manufacturers

One of the most difficult situations faced by sales representatives is when a dispute arises with a manufacturer that the sales rep still represents and wants to continue representing. When a sales rep is wrongfully terminated or has not been paid commissions that remain owed after the relationship with the manufacturer has ended, the rep can pursue all available avenues of relief — including litigation — if necessary.

When the sales representative agency still represents the manufacturer, the situation requires more finesse. There are rare situations where a sales agency decides to sue … Read the rest

What to Do When Termination Is Likely

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The following article is reprinted with permission from PTRA (Power-Motion Technology Representatives Association),

This year, we received a phone call, like many we have gotten over the years, from an owner of a profitable independent manufacturers’ representative organization. He was serious and concerned. He explained that his company has several salespeople, a small support staff, and one manufacturer that accounts for almost 70 percent of its annual commissions. That manufacturer had recently been acquired by a larger company in the same industry and the majority of the acquiring company’s territories were covered by a direct sales force.

In my … Read the rest

Exercising an Ounce of (Legal) Prevention


Sam Salesdude is a sales representative in Minnesota who recently was unceremoniously terminated by Wonderful Widgets, Inc. On August 31, 2014, Steven Sales Manager apologetically told Sam that the company had decided to go in a different direction and Wonderful Widget was terminating Sam’s contract effective immediately. In fact, the contract required 30 days’ written notice. When Sam’s September commission check arrived, Wonderful did not include a commission statement and Sam estimated that his commissions were at least $20,000 short.

Sam should:

  1. Cash the check and call Steven the Manager at Wonderful to discuss the shortage.
  2. Tell Steve just what
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Independent Contractor or Employee?

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It’s a problem that faces small and large agencies alike. A principal wants to control every move the rep makes. Your regional manager starts telling you how many people to hire and sometimes whom to hire. He wants onerous frequent reports about how you spend your time, and he wants more of that time. In short, the company wants to treat you as an employee.

In the United States, most workers are either 1099 independent contractors or W-2 employees. But there is no such thing as a “1099 employee” or a “W-2 contractor.” Misclassification of a sales representative as a … Read the rest

Back to Basics: Why Contracts Can Be a Rep Agency’s Most Valuable Asset


Successful sales reps talk about adding value. Reps provide service and expertise that help their customers operate more efficiently, and reps identify new customers and sales opportunities that help their principals grow. But reps are often so focused on getting the sale and running the day-to-day operations of their businesses that they don’t have the time to stop and think about how to add value to their own businesses — how to create a business that is as successful and saleable as possible.

Rep agencies don’t carry inventory and have limited tangible assets. So what are the assets of your … Read the rest