Sure, you need to be careful and savvy when taking your business overseas, but it all boils down to common sense. Here’s what I mean…
You may find it hard to believe, but contracts can be win/win. I normally tell horror stories from my X-Files (X for export) that show you what not to do. But I am about to head off to Broome on a holiday and am in such a positive mood that I thought I would share a nice story today for a change!
A client of mine who has a fashion label just got back from a very successful trip to Britain, where they formed a relationship with an agent, who will be promoting their brand there and securing sales to retailers.
Before my client left, I gave him an agency checklist to read on the plane to help him formulate his wish list for his relationship with any potential agent. He went to London knowing, among other things, that he would need to ask the agent to commit to securing a minimum number of sales, he would need to perhaps tier the commission structure to encourage the agent to meet the minimum targets, and that he would need to clarify what types of retailers he wanted to stock the products.
Normally, clients are tempted to just bombard future agents with a list of demands before they have had the chance to gauge the values and experience of the agent. This can scare the agent off.
These are the things my client did well:
He and the agent came to a loose agreement in relation to the terms of the agency. You should never commit to anything in those initial overseas meetings because many get trapped by making promises they can’t keep when caught up in the romanticism of an overseas jaunt!
My client then asked the agent for a copy of any existing agency agreements they had in place with sellers.
Armed with his wish list, he was then able to compare his list with the “norm” in the agent’s mind. He decided on some additions and changes and they talked them through. Making reference to an agreement the agent was accustomed to helped soften the blow of introducing minimum sales targets. My client also asked the agent to give him the minimums and they took it from there.
My client then amended the agent’s pro forma agreement in layperson terms and sent the document to me.
I then formulated an agency agreement that was more user friendly, reflective of my client’s business needs but ensuring that all the points that had been covered in the agent’s pro forma were covered so that they didn’t get a shock when they received a different document to their pro forma.
We also drafted an “international conditions of sale” that were annexed to the agency agreement so that the agent could ensure that retailers buying the products would comply with those conditions.
All in all, this was a win/win situation – not because of any particular legal brilliance on my part or commercial savvy on my client’s part. It really boiled down to common sense, looking at things from the perspective of relationship building. Exporters will often find that this is the key to success in securing global domination.
Lynda Slavinskis is an outgoing, intuitive and commercially savvy lawyer. She has worked in-house at Sussan Corporation and Tattersall’s and now assists small and medium businesses with import, export, leases, franchising, employment and general business advice as principal solicitor of Lynda Slavinskis Lawyers & Consultants. Lynda is on the Victorian Government’s Small Business Advisory Council.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
