Does your business use agents? If so would you and each of your agents give the same answers to questions about the various key terms of your arrangements? Are you sure that you understand the implications of using agents for the promotion and sales activities of your business in this way? Are you sure this is more appropriate for you than using distributors?
As a starting point we should be clear that an agent is a self- employed individual or a company other than yours which is authorised by your business to carry out the agreed marketing and sales activity for your business. By contrast a distributor has been authorised to market and or sell your products or services, but actually buys these from your business to sell on their own behalf.
Some advantages of using agents
- Agents may offer particular expertise not available within the employed sales staff within the business, this may be key to reaching a new or niche market, or undertaking a specific campaign not part of your core sales activities
- Agents are routinely paid only by reference to results and so do not represent the ongoing cost that internal sales staff represent
- Your business will usually have more control of the activities of an agent than of a distributor (who is essentially a very separate business and not acting on your behalf); allowing the business to retain more control over the sales process of their products/ services and therefore the customer “journey” as a whole;
- It may be easier to integrate agents than distributors with an existing sales structure.
Common problems with using Agents
- Agents overreaching their authority
- the business being liable for some of the Agent’s behaviours
- disputes over territory and exclusivity issues
- disputes over calculation and payment of agency commission
- agents claiming substantial termination payments as Commercial Agents under European law
These problems usually arise because the relationship has not been set up on the basis of a clear agreement which addresses all the key legal and operational issues and controls. Such misunderstandings can be expensive, and disruptive operationally, not to mention potentially damaging to the reputation of the business, and its products or services.
We believe that to avoid these pitfalls your business needs to:
- ensure that it has identified its agents, particularly those who qualify as Commercial Agents under European law; and
- get clear written agreements in place with each which address all of the key operational, control and legal and financial issues and risks.
What should an agency agreement include?
Based on our experience and expertise any agency agreement should be clear on at least the following:
- How long the agent is appointed for
- What products/ services the agent is authorised to market
- Any geographical or other limits on the agent
- How performance is to be measured
- How commission is to be calculated and paid
- Whether the agent has any exclusivity rights
- How the business or agent can terminate the agreement
- Ownership of confidential information/ client lists/ intellectual property rights.
How we can help
We can advise you in relation to existing agency arrangements or proposed new arrangements and work with you to arrive at an Agency Agreement that works for your business and addresses the operational and legal risks which you face when using agents for marketing and sales.
FREE initial enquiry
To discuss your legal needs, please call Marie Huntley on 020 3609 8764.
Simply outline the situation you're facing, and we'll tell you how we can help and what it will cost.
There's NO CHARGE for the initial conversation. That's right. It's completely free. Zilch. Nada.
By the way, our fees are often fixed or capped to help you budget, and we send invoices monthly so you can spread the cost.