Items to Address on an Independent Manufacturers’ Sales Representative Agreement

The first system to implement when working with sales representatives is a standardized or template sales agreement form.  A template where you only need to change a few of the details is very handy when using more than one sales rep or rep firm.

Here are some of the points you need to cover in your template form:

1.  Territory. List the cities, states or regions you will want your sales rep will cover for you

2.  Type (s) of accounts you want serviced, such as gift stores, mass market outlets, discount stores etc.

3.  Exclusive representation. List clearly if you are willing to give your rep an exclusive agreement in your designated territory.  Exclusive representation bars any other sales rep from selling in this territory.   Also, detail how you wish your sales reps to handle your “house account” that you may wish or not wish to retain and service in this territory.  Make sure to include a detailed list somewhere in the agreement.

4.  Commission amount and payments. Agreed upon commission percentages are listed as another line item with instructions as to when and how they are to be paid.  Having a section addressing how or if commissions will be paid if an account is turned over to collections, is also helpful.

5.  Terms of sale. You need a section clearly stating the terms that you will accept from a potential buyer.

6.  Samples. What or how you plan to supply sample to sale reps needs to be addressed in this section.

7.  Product literature. You need to inform your sales reps if you have catalogs or product literature they can leave with potential buyers.

8.  Incurred expenses. Independent sales reps usually pay their own expenses for gas, lodging, meals, etc.  But other expenses may be shared or paid by producers such as trade show expenses or special advertising, etc.  Add a line item to your sales agreement to address these potential extra expenses and how they will be handled.

9.  Default or dissolution. Be sure to include a section listing what happens when you no longer wish to retain a sales rep.

10.  Changes to the agreement. Make sure to note that the agreement may be altered ONLY by written notification by either party.  This stipulation will avoid any confusion over verbal comments or agreements.

11.  Signatures and date. Designate a spot at the bottom of the agreement for both you and your sales rep to sign and date the agreement.

Next week, I will share with you some of my experiences on working with producers.

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