House accounts are the pre-nuptial agreements of rep-principal relationships. To a rep, the announcement that a proposed rep relationship is contingent upon the rep accepting house accounts is just as welcome as the announcement to a prospective spouse that a proposal of marriage is contingent on a pre-nuptial agreement.

What the rep hears: “All or part of what was mine before our relationship began stays mine — I will only share freely what comes to us jointly after our relationship begins.”

What the rep thinks: “It’s not fair that a principal can hold back assets from our relationship when I cannot. After all, once I introduce my customers to the principal and the principal’s products, those customer relationships become a shared asset, an asset likely to continue to be shared even if our rep-principal relationship were to end. When I’m asked to sign a rep agreement with house accounts, the principal gets access to all of my customers, but I don’t get access to all of the principal’s customers. How is that fair?

When a rep-principal relationship begins with the principal withholding customers it is only natural for the rep to reciprocate by withholding as much customer information as possible. From such an inauspicious, arm’s-length beginning, such rep-principal relationships face a real uphill struggle to become trusting, collaborative and productive.

Before encumbering a new rep relationship with that kind of relationship baggage, the principal really needs to ask:

• Am I withholding these house accounts because some of my accounts are just too big to turn over? Then work with the new rep to find a mutually agreeable, less-than-full-commission win-win arrangement to service those accounts economically but fairly.
• Am I withholding these house accounts because low margins simply leave no room for a rep? Then have a candid conversation with the rep about those margins. Perhaps the rep can assume some of the cost-creating activities associated with the account and settle on a fixed-fee agreement instead of a percentage of sales.
• Am I withholding these house accounts because I am taking a flyer on a rep company that I don’t know enough about to trust with my existing accounts? If you don’t know enough about a rep to entrust that rep with existing customers, then pause the hiring process while you conduct your due diligence and only hire this rep after you are confident that he or she is worthy of your trust.

To principals who complain about the high cost of performing thorough due diligence, I agree that hiring the right rep is time-consuming and expensive. In fact, the only thing more time-consuming and expensive than conducting the due diligence to hire the right rep is failing to complete the due diligence and hiring the wrong rep over and over and over again.