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Manufacturers'
representatives and manufacturers often seek to gain advantage over their partner
by incorporating a bias into the representative agreement favoring the author,
placing the other party at a disadvantage. This technique rarely enjoys the
benefits intended. The best agreements are those that are written with the objective
of "balance" between the manufacturers' representative and the manufacturer.
If the relationship begins with a biased agreement, that bias works against
development of a solid relationship. Since the agreement is the foundation of
the partnership, the agreement must be crafted with words and phrases that elicit
trust.
Each clause of the agreement
should seek to strike a balance between the power of the rep and the power of
the manufacturer. If there is a clause on indemnification, that clause should
be written such that the supplier holds the rep harmless and the rep holds the
supplier harmless. If there is a paragraph outlining the duties and obligations
of the representative, there should also be a paragraph outlining the duties
and obligations of the manufacturer. A unilateral phrase only works to the ultimate
distrust of one party by the other. Distrust always works against development
of the relationship and ultimately against sales and sales growth, the original
purpose of the relationship and the agreement.
Prepare for the future.
Partnerships are born during a phase of euphoria. They develop during a phase
of expansion and excitement. They mature during a long period of hard work.
They come unraveled for a number of reasons and ultimately must be terminated.
Spell out clearly the conditions under which the agreement may be terminated
and what happens to both parties after notice of termination.
Termination may be for
cause or for convenience. Both the manufacturer and the representative should
be allowed to terminate the agreement for cause or for convenience. Sometimes
termination for cause achieves instant agreement between the parties, as in
cases where the repesentative or manufacturer acquires a competing line. In
too many cases however, getting both parties to agree that a particular cause
is valid is extremely difficult. Termination for convenience eliminates an unnecessary
argument.
Mature manufacturers
and manufacturers' representatives don't allow themselves to be treated as the
junior partner in a representative agreement. When a partner is able to insert
a biased clause into the agreement, it must be because the other partner is
less seasoned. Remember, that junior partner will become seasoned with time
and will ultimately learn to understand that a biased agreement is to its disadvantage.
By: Glen Balzer. E Mail:
glenbalzer@msn.com
Mr. Balzer is an expert witness and
consultant involved with the creation and negotiation of agreements between
electronics manufacturers and manufacturers' representatives.
