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wallstreetesq., Attorney
Category: Business Law
Satisfied Customers: 17252
Experience:  10 years, Corp litigation, Of Counsel to several global and nationwide corporation
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Ive been talking to a number of people that want to sell products

Customer Question

I've been talking to a number of people that want to sell products and services that my window company offers. I'm not sure how to protect myself, as a business owner, from legal issues that coupld potentially arrise from them mis-representing my company. Also, I want to limit my losses from them mis-ordering product that would be unusable. I want to make them accountable for their own mistakes.
Would it make sense to enter an agreement with them as exempt independent reps? Or how about setting them up as independent brokers or sub-dealers and allowing them to use my company name? Kind of like a franchise concept.
Submitted: 7 years ago.
Category: Business Law
Expert:  wallstreetesq. replied 7 years ago.
how will they get paid?
Customer: replied 7 years ago.

A possible arrangement might be to enter an agreement having the rep set up as a Broker or Sub-dealer. The sub-dealer would have wholesale pricing from my company and would write their own contracts with customers.

A Broker would write contracts for us and slap a broker fee of, say, 20% on top of the contract as their commission which is to be paid by the customer.


Otherwise, I'm guessing that I would have to set them up as commission based exempt reps that got paid after we were paid on a job and it could be done on a sliding scale based on the profit or mark-up amount.

Expert:  wallstreetesq. replied 7 years ago.
I would suggest you have them as independant contractors, where you pay them on a 100% commission and they would be solely independant from your company. Also, you would pay them a 1099 and not have to pay state and federal taxes. The liability would be on them, and you could even require them to have insurance.
Customer: replied 7 years ago.

But, what I am trying to get suggestions on, is how do I protect myself from losses caused by them and their mistakes?

And how can I protect myself from any mis-representation from them? Is it ok to have them get a contract signed by the customer and have the rep sign it. And then have a clause stipulating that the contract is not binding without my signature?

Expert:  wallstreetesq. replied 7 years ago.
As independant contractors they would be liable, you would have a separate contract, to the client signed by them for your company, and another for the contractor, indemnifying you of any liability caused by them. It would be in your contract stated to the client, that you are not liable for the contractors mistake, and in the contractors contract.
Customer: replied 7 years ago.

So, maybe we can wrap this up. Would I be able to provide them with business cards with their name? If so, would the card need to have them titled as independent Sales Associate (or Rep)? Would that be the clarification to the customer so that they understand that the rep is an independant?



Expert:  wallstreetesq. replied 7 years ago.
to be sure they will be treated as contractors, you can have their name printed on a card but I would not put your company name on the card or phone number,, possibly underneat state independant salesman of various window products.