January 2014
Transcription
January 2014
IHRA REPorter Sound agreement Thoughts on our survival helps rep avoid loss of commissions by Steve Grossman, CPMR I GM Partners IHRA Founding President; MRERF / IPA Board Govenor have been giving a lot of thought and had many conversations with manufacturers, suppliers and fellow reps as to why our profession as manufacturers’ reps is on the decline and are we going the way of the buggy whip. While I see us as a declining group, there will always be a surviving few. As we have all commented, most of our suppliers’ sales meetings are attended by sales veterans. Unless a rep firm was a family-owned business that was passed on to their children, would a younger person want to go into a profession with all the head winds that are present? I truly believe that the main reason the slippery slope began is when reps were offered and accepted specific accounts verses a whole territory. This usually led to little or no income to sustain the field salespeople. So instead of receiving some income to pioneer the rest of the territory, the financial risk was 90% on the rep. To me this meant a partnership was never really established. If our profession is going to thrive again there needs to be fundamental changes in the way reps and suppliers work together. • If the supplier will not invest money into a new territory, why should a rep? If the supplier hired someone, which would cost tens of $1000’s, so why not develop a win/win philosophy where the rep gets seed/pioneer money and the supplier gets a bargain? • Reps need to be realistic when accounts grow large; that the com- By: Gerald M. Newman & Adam Glazer Schoenberg Finkel Newman & Rosenberg, Ltd. Adam Glazer A IHRA Legal Counsel Gerald Newman fter signing a new contract with a principal, most reps will properly focus on generating sales within the newly assigned territory. Even in this era of corporations getting gobbled up or “restructured” on a regular basis, little thought is given to what happens if the principal gets bought out. Yet several important questions are usually presented. Is the rep’s commission stream adequately protected? What happens if the acquiring party purchases only some of the principal’s assets? In the worst case scenario, can the principal and the new purchaser conspire to orchestrate a sale that lets the purchaser off the hook from paying commissions under the terms of their deal? These issues were front and center in a case recently decided by the federal court in Kentucky involving a rep who found his contractual rights at risk after certain assets of its principal were acquired by a company with whom it had no contractual or other relationship. The fact pattern, while alarming, is hardly isolated. Sales rep firm Telecom Decision Makers, Inc., (TDMI) contracted with Navigator Telecommunications, LLC, in 2005 to solicit local and long-distance accounts for its telecommunications business. The lucrative rep agreement called for Navigator to pay continuing commissions on accounts TDMI generated until the customers’ contracts with Navigator terminated. The rep agreement contained a common term providing that it was Continued on page 3 >>>> binding on “the successors and assigns of Navigator in connection with and in contemplation of any reorganization, bankruptcy, merger, consoliJanuary 2014 dation or sales of all or substantially all of the ownership interest or asThe Power of Kindness............................................. Page 4 sets of Navigator.” In the event of a “Change of Control,” the contract is Booster Club Members & Application................ Pages 5 & 6 Continued on page 2 >>>> IHRA Member Ads..................................................... Page 7 International Housewares Representatives Association (4) Mfrs Seeking IHRA Members............................... Page 8 Marketing & Field Sales Professionals Serving the Calendar of Events.................................................... Page 9 Home • Housewares • Gourmet • Hardware Industries Page 1 Newman & Adams (continued from page 1) considered as “deemed assigned to Navigator’s successor.” Birch Communications, Inc., entered into an asset purchase agreement to purchase certain business and residential lines from Navigator in 2008. Before that agreement was signed, Navigator gave notice of termination to TDMI. Birch also sent TDMI notice that it was purchasing substantially all of the residential and business accounts of Navigator. After the agreement was executed, Birch informed TDMI that it did not assume responsibility for, and would not pay, the continuing or “residual” commissions due under Navigator’s contract with TDMI. This led TDMI to sue Birch, asserting that its purchase of Navigator’s residential and business local and long distance accounts comprised a “Change of Control” that assigned the obligation to pay commissions to Birch under its contract with Navigator. Birch disputed that its purchase amounted to a “Change of Control,” contending that it didn’t acquire substantially all of Navigator’s assets, and Navigator retained significant other business. After the parties took discovery on the “Change of Control” issue, Birch moved for summary judgment, raising three central arguments. 1. Did Birch’s asset purchase change control of Navigator? Because TDMI had no contract with Birch that could be enforced, the court quickly determined that “Telecom’s rights rise or fall” on the interpretation of “Change of Control” from its contract with Navigator. Birch pointed to certain persuasive facts to contend that no “Change of Control” took place: 1) it purchased only a small portion of the Navigator assets; 2) Navigator had 50 employees prior to the asset purchase, and now has 39; 3) Navigator remained an operating company in the same business after the asset purchase; 4) Navigator continued to earn revenue of about $2.3 million per month after the sale, down from $3.4 million before the sale; 5) Navigator sold only 15 to 17 percent of its 104,000 telephone lines to Birch, and retained 85 percent of its total telephone lines and 78.8 percent of its revenue; and 6) Navigator’s EBITDA (calculation of earnings before interest, taxes, depreciation and amortization) increased by 96.2 percent. Recognizing these facts were compelling, TDMI relied on the summary judgment standard, where it doesn’t have to overcome all of Birch’s facts and win the case; that duty applies later at the trial stage. Instead, it need only show a dispute as to certain material facts to render summary judgment inappropriate. To demonstrate disputed facts, TDMI effectively turned to an economic analysis and submitted an expert opinion that the asset purchases did affect a “Change of Control” based on Birch’s acquisition process, the allocation of value based on gross margin and the allocation of value based on net income. This “diametrically opposed expert testimony concerning the nature and characteristics of the asset sale and its impact on Navigator” convinced the court that a classic factual dispute existed, precluding summary judgment. While the raw numbers Birch marshaled from Navigator’s business records were powerful, the court ruled that “these mere numbers, without more, do not evidence whether a sale of all or substantially all of the assets of the company occurred.” A trial would be necessary to resolve the disputed factual issue of whether there was a “Change of Control” of Navigator. Before TDMI would live to fight another day, however, it had to withstand Birch’s two other related contentions. Fortunately for TDMI, the court considered these and succinctly found “neither argument has legs.” 2. Do the contractual payment obligations survive termination? Navigator provided its 30-day notice of termination on June 20, 2008, enabling Birch to seek summary judgment on the grounds that when it entered into the asset purchase agreement with Navigator in November 2008, no agreement with TDMI was in existence, and no assignment could therefore have been made. Continued on page 3 >>>> Page 2 Newman & Adams (continued from page 2) The court deemed the argument that the sales rep agreement was not in effect on the date the asset purchase agreement was signed “a red herring.” In advancing this argument, Birch ignored other language in the rep agreement expressly providing that the obligation to pay the residual commissions survived its term. The court also found support in the rep agreement’s language establishing that Navigator would owe the residual commissions even under a “Change of Control.” Finding that the rep agreement provided for assignment of “the ongoing obligation to pay residual commissions” to Birch, the court concluded that the effectiveness or viability of the rep agreement after July 2008 was irrelevant. Summary judgment on this theory was easily denied. 3. Does the absence of revenue collection by Navigator matter? Birch then cherry-picked other language in the Navigator-TDMI agreement stating: “payment of residual commissions will survive ... and will be paid ... so long as ... Navigator is collecting revenue ... under this Agreement.” Reasoning that it, not Navigator, was collecting revenue for services under the Navigator-TDMI agreement, Birch urged that no residual commissions were owed TDMI. As with the prior argument, the court found Birch was inappropriately focusing on the viability of the rep agreement on the date the asset purchase agreement was signed. The proper focus is whether the rep agreement effectively assigned the obligation to pay commission in the event of an asset purchase. Finding that it did, the court viewed Birch as standing “in the shoes of Navigator for purposes of assessing the collection of revenue,” and it denied summary judgment to Birch on this basis as well. TDMI survived summary judgment chiefly because its rep agreement with Navigator was well-drafted and included several important provisions for its benefit. A lesser agreement could have yielded significantly different results for the rep. Particularly where commissions were contractually due to continue even after the agreement’s termination, it was essential for the rep to ensure that the value carefully provided in one contract term is not undermined by another, less thought-out provision. Gerald M. Newman and Adam Glazer are partners in the Chicago law firm of Schoenberg Finkel Newman & Rosenberg, Ltd. Gerry serves as general counsel to IHRA and he, and other SFNR associates are regular contributors to The REPorter®. They participate in Expert Access, the program that offers telephone consultations to IHRA members. You can call Gerry at 312-648-2300, send a fax to 312-648-1212, or send e-mails to: Gerald.Newman@sfnr.com. Grossman (continued from page 1) mission structure needs to be rebalanced. Specific responsibilities need to be agreed on so both sides prosper. Suppliers need to refrain from making house accounts since adjusted commissions will continue to support the rest of the territory. • Suppliers need to fully understand that if the rep has an office or works out of his home, commissions paid goes to cover other personnel, insurances, travel, car, entertainment, phone, equipment , utilities, etc, and hopefully a living wage. This is not a we/they situation, but an industry challenge that should be met head on before it is too late. If a true dialog is not established, indifference will be the winner and the industry the loser. I urge housewares manufacturers to seriously look at this situation and make a conscious decision: do they want quality professional reps to survive? And professional reps need to understand that with seed monies, additional accountability is required. Your comments are always welcome. Thank you and good Selling,Steve Grossman IHRA member, 847.867.3016 steman4@aol.com Page 3 Here is a special thought for the New Year THE POWER OF KINDNESS I’ve mentioned before that, despite my great admiration for people who are instinctively and consistently kind, kindness does not come naturally to me. Yet the older I get, the more I agree with Abraham Heschel, who said, “When I was young, I admired clever people. Now that I am old, I admire kind people.” Henry James was more emphatic when he said, “Three things in human life are important: The first is to be kind. The second is to be kind. And the third is to be kind.” In 1994, Dr. Chuck Wall, a professor of human relations and management at Bakersfield Collegein California, came up with a concept that turned into an influential movement. Weary of hearing about “senseless acts of violence,” he began to teach and talk about “random and senseless acts of kindness.” The idea was simple: the bestr e s p o n s e to a world coarsened by selfishness andcruelty was individual acts of kindness. In 1999, Catherine Ryan Hyde wrote a novel called Pay It Forward (later adapted into a movie) that builds on Dr. Wall’s initial inspiration. It starts with a teacher’s assignment to “THINK OF AN IDEA FOR WORLD CHANGE, AND PUT IT INTO ACTION.” Trevor, the 12-year-old hero, comes up with an idea. If he does something “real good” for three people and asks in return that instead of them “paying him back,” they “pay it forward” by doing a good deed for three other people, who are in turn asked to pay it forward, the math quickly shows that he could change the world. Whether acts of kindness are random or spontaneous as advocated by Dr. Wall or premeditated as proposed by Ms. Hyde, acts of kindness are certainly not senseless. To the contrary, they’re the best possible proof of good sense. Every single person can send forth ripples of kindness and compassion simply by being nice. This is Michael Josephson reminding you that character counts. Michael Josephson is a former law professor and attorney who founded the nonprofit Joseph and Edna Josephson Institute of Ethics located in Los Angeles, California, out of which he operates as a speaker and lecturer on the subject of ethics. josephsoninstitute.org/michael/ Page 4 Please Keep The IHRA Booster Club Growing! As it helps us build our educational fund and defray the added costs of an additional day at the International Home + Housewares Shows 2014 IHRA Rep Member Boosters Diamond ... $500 or more Bang-Knudsen, Inc., Seattle, WA J. Grob Associates, Inc., Kensington, MD The Northeast Group Inc., Norwood, MA Platinum ... $400 or more Continental Marketing, Tualatin, OR Schoenberg, Finkel, Newman & Rosenberg, LLC Gold ... $300 or more Kulovitz & Associates, Inc., Dallas, TX Mid-Atlantic Sales Group, LLC, Dresher, PA Silver ... $200 or more The Barrington Rep Group, Inc., Burr Ridge, IL Fog City, Oakland, CA Bronze ... $100 or more The Belwether Group, LLC, Higganum, CT Koval ~ Williamson, Mukilteo, WA David S. Lapine Co., Inc., Stamford, CT 2014 Manufacturer Boosters Diamond ... $500 or more **International Housewares Association Platinum ... $400 or more *American Bag Company *Artisan Metal Works *Bike Brightz *The Cookware Company *H & H Wholesale *Lancaster Colony Commercial Products *Liss America *PetzBest Products Group *Stanco Metal Prodcuts, Inc. *Terinex Limited *Trademark Productions, Inc. * Vinaroz Cookware Gold ... $300 or more Silver ... $200 or more Bronze ... $100 or more *IHRA Manufacturer Members **In-Kind Services Representatives. Manufacturers. Want to become an IHRA Booster? See next page for complete details. Page 5 BE AN IHRA BOOSTER! Help us build our educational fund, stay a viable resource for manufacturers seeking field sales professionals, develop special activities and events. and be widely identified as an IHRA Booster. Your company will be identified in the monthly REPorter Newsletter and in multiple signage around the IHRA Hospitality Room at the International Home + Housewares Shows ... AND MORE ... see below! IHRA Booster Levels for IHRA Rep Members IHRA Booster Levels for all Industry Manufacturers Diamond ... $500 or more earns FREE 1/3 page Locator ad or $225 credit for larger space Platinum ... $400 or more earns FREE 1/4 page Locator ad or $168.75 credit for larger space Gold ... $300 or more earns FREE 2/9 page Locator ad or $150 credit for larger space Silver ... $200 or more earns FREE 1/9 page Locator ad or $75 credit for larger space Diamond ... $500 or more earns FREE, as needed, Manufacturer Seeking Representatives HOT Lines, 1/4 page ads in monthly REPorter Newsletter and all IHRA Member benefits & services, including FREE eLocators Platinum ... $400 or more earns FREE, as needed, Manufacturer Seeking Representatives HOT Lines, 1/8 page ads in monthly REPorter Newsletter and all IHRA Member benefits & services, including FREE eLocators Gold ... $300 or more earns FREE 1/8 page, Manufacturer Seeking Representatives ads (limit 4), in monthly REPorter Newsletter and all IHRA Member benefits & services, including FREE eLocators Silver ... $200 or more earns FREE 1/8 page, Manufacturer Seeking Representatives ads (limit 2), in monthly REPorter Newsletter and all IHRA Member benefits & services, including FREE eLocators Bronze ... $100 or more earns our sincere THANK YOU! NOW - Accepting Booster Club Membership through 2014 - NOW YES, we want to be an IHRA Booster! Please sign us up. Company ________________________________________________ q IHRA Rep Member q Industry Manufacturer Address _________________________________________________ City, State, Zip, Country ________________________________________________________________________________________________ Phone ___________________________________ Fax __________________________________ eMail ________________________________________ Authorized By __________________________________________ Check enclosed for $ Booster Level: q Diamond q Platimum q Gold q Silver q Bronze or charge to credit card: # _________________________________________ Exp Date _____ Card Code ____ Billing Zip _____ Mail to: IHRA • 1755 Lake Cook Road • Suite 318 • Highland Park, IL 60035 ... or Fax to: 847.748.8273 Page 6 Manufacturers: Contact These Performance-Proven, Multiple-Line, Field Sales Professionals to learn how they can profitably bring your products and programs to market. Bang-Knudsen Specializing in Housewares, Homestore & Giftware Industries Since 1973 Representing Vendors in the New England States & New York, New Jersey 129 Morgan Drive, Norwood, MA 02062 781-352-1400 (phone) 781-352-1450 (fax) 230 Fifth Ave, Ste 413, New York, NY 10001 212-696-4450 (phone) 212-696-4742 (fax) www.northeastgroup.com Over 50 years of sales experience in Minnesota • Wisconsin North & South Dakota with special emphasis on: TARGET • TARGET DOT COM WAL-MART.COM PREMIUM & INCENTIVE • GROCERY Mark J. Glotter 612.822.9501 Cell: 612.414.8055 • Fax: 612.822.5539 mark@marketsharesales.com Representing gourmet housewares to leading retailers in the Pacific Northwest for over three decades. We know the territory. 542 First Ave. So. Suite 500 Seattle, WA 98104 206.767.6970 www.bang-knudsen.com __________________________ Contact: pbang-knudsen@bang-knudsen.com Manufacturer’s Representatives specializing in Home Décor, Wall Décor, Frames, Bath Décor, Photo Storage, Furniture, Housewares and Gifts Primary Account Representation Kohl’s Jo-Ann Stores Illinois Wisconsin Ohio Professional Account Management 30 Years Experience • • • • • Efficient Account Penetration Quality Customer Service Market Trend Direction Product Development Sales, Inventory & Profitability Analysis www.thebarringtongroup.net Contact: d.peake@thebarringtongroup.net 6212 South Elm Street, Studio B Burr Ridge, Illinois 60527 Phone: (630) 655-2924 Trusted Business Partners With more than 1,600 active accounts, an average of 15 years of sales experience per sales rep, and a 32 year business track record, companies hire us as the sales and marketing company of choice. Learn more about how J.Grob is helping upscale manufacturers and importers expand their business. Contact: John Grob J. Grob Associates, Inc. P.O. Box 149 • Kensington MD 20895 P: 301.933.8657 • F: 301.933.0239 E: johng@jgrobinc.com www.jgrobinc.com 37 Aspen Road Sharon, MA 02067 Tel: 781.806.5129 Fax: 781.806.5131 Representing Housewares, Tabletop and Giftware to all Major and Independent retailers in New England and Upstate NY for 20 years Contact: sales@pearlmangroup.com 440 Totten Pond Road Suite 100 Waltham, MA 02451 Phone 781-890-0111 Page 7 Manufacturers Seeking IHRA Field Sales Professionals Ad Rates 1/8 page: $100 1/4 page: $175 3/8 page: $250 1/2 page: $325 3/4 page: $475 Full page: $675 Manufacturers: Are you looking for well-qualified, performance-proven, field sales professionals? Instant HOT Lines . . . A onetime eMail that provides immediate information on your line, only, to reps in specific territories or throughout the world Reruns of same ad within 12 months are at 50% discount! Contact IHRA 800.315.7430 info@ihra.org www.ihra.org Ad Dimensions 1/8 page: Vertical, only 3 11/16” h x 2 7/16” w H&H WHOLESALE 1099 Rochester Rd Troy MI 48083 P: 800.995.5750 x112 F: 248.307.0706 www.hhwholesale.com IHRA Person to Contact: Dave Kapla eMail:dkapla@hhwholesale.com Territories Open: USA, Canada, Mexico Commission Rate: 10% Years in Business: 12 Currently doing business in the USA through direct sales 1/4 page: Vertical 7 1/2” h x 2 7/16” w 1/4 page, Horizontal 3 11/16” h x 4 15/16” w 3/8 page: Horizontal only 3 11/16” h x 7 15/16” w 1/2 page: Vertical 7 1/2” h x 4 15/16” w 1/2 page: Horizontal 3 11/16” h x 10” w Cookware, bakeware and small electric appliances with Thermolon ceramic non-stick coating, under different brand names: GreenPan, GreenLife, Fiesta and Twiztt by Joan Lunden. 3/4 page: 7 1/2” h x 7 15/16” w Currently doing business in 80 countries worldwide and in the USA through reps in various states Full page: 7 1/2” h x 10” w PRODUCTS: Medical Disposables including brand-name diabetes supplies; the best selling Vitamins/Supplements, As Seen On TV items. Health & Beauty Aids, Household Products, Independent Living Items, Hottest Toy, Gift & Novelty Items, Travel Products, Personal Care Appliances, Special Opportunities Buys and Closeouts. IHRA Contact: Jessica Fucale: Jessica.fucale@cookware-co.com Harvey Levinson: Harvey.levinson@cookware-co.com The Cookware Company 120 White Plains Road, Suite 115 Tarrytown, NY 10591 Phone: 914-372-7777 Fax: 914-372-7776 www.cookware-co.com Manufacturers: Are you looking for well-qualified, performance-proven, field sales professionals? Instant HOT Lines . . . A onetime eMail that provides immediate information on your line, only, to reps in specific territories or throughout the world Contact IHRA 800.315.7430 info@ihra.org www.ihra.org PRODUCTS: Pet Leashes & Collars, Grooming Tools, Training Pads & Wipes. We now have “green” products that are extremely hot in the marketplace!! This line includes organic cotton and recycled polyester leashes and collars. Our pricing is extremely low since we are a partner in a joint venture, vertical plant in China where we also manufacture our own webbing! More information at: petzbest.com If interested, Contact: PETZBEST PRODUCTS GROUP P.O. Box 37 West Hempstead NY 11552 (516) 575-4272 Fax: (516) 575-4739 Person to Contact: Kathy Pancila, VP Sales eMail: kpancila@jellygear.com IHRA Territories Open: U.S.A., Canada, Mexico Page 8 2014 CALENDAR OF EVENTS January 4-7 Philadelphia Gift Show Phiadelphia PA 7 - 10 Consumer Electronics Show Las Vegas NV 7 - 14 Atlanta Int’l Gift & Home Furnishings Atlanta GA 26 - 30 Las Vegas Market Las Vegas NV 26 - 30 Toronto Gift Fair Toronto ONT Canada 31 - Feb 3 California Gift Show Los Angeles CA 11 - 14 Canadian Home Furnishings Market Toronto ONT Canada February 1-6 Gift & Home Textiles Market New York NY 15 - 19 Dallas International Lighting Market Dallas TX 1-6 NY Now New York NY 15 - 21 Dallas Total Home & Gift Market Dallas TX 4-6 Kitchen and Bath Show Las Vegas NV 16 - 22 Chicago Market: Living and Giving Chicago IL 7 - 11 Ambiente Frankfurt Germany 18 - 21 Seattle Gift Show Seattle WA 15 -18 San Francisco International Gift Fair San Francisco CA 18 - 21 Windy City Gift Show Chicago IL 16 - 19 Alberta Gift Fair Edmonton ALB Canada 19 - 21 Fancy Food Show San Francisco CA 21 - 27 GALLA Winter Market Los Angeles CA 25 - 27 Orlando Gift Show Orlando FL 7-9 Atlanta Spring Gift, Home Furnishings and Holiday Market Atlanta GA April 5 - 10 High Point Market High Point NC 8 - 10 Portland Gift & Accessories Show Portland OR 6-8 Chicago Market: Living and Giving Chicago IL March 11 - 13 Travel Goods Show Phoenix AZ 22 - 25 New York Tabletop New York NY 15 - 18 International Home + Housewares Show Chicago IL May 6-8 National Hardware Show Las Vegas NV 23 - 26 Boston Gift Show Boston MA 17 - 20 International Contemporary Furniture Fair New York NY 24 - 27 New York Home Fashions Market New York NY 18 - 20 Surtex New York NY 26 - 30 Montreal Gift Fair Montreal QUE Canada June 09 - 11 NeoCon World’s Trade Fair Chicago IL 27 - 30 Dallas Total Home & Gift Market Dallas TX 30 - April 1 GALLA Spring Market Los Angeles CA 18 - 21 Dallas International Lighting & Accessories Market Dallas TX 18 - 24 Dallas Total Home & Gift Market Dallas TX 29 - July 1 Fancy Food Show New York NY If we are missing any events you think should be on our calendar, please let us know at: info@ihra.org. Thank You! Page 9 IHRA The IHRA International Housewares Representatives Association 2014 IHRA Board of Directors & Staff *Chairperson: John Grob, J. Grob Associates, Inc. *Immediate Past Chairperson: Mark Glotter, Marketshare Sales, Inc. *Executive Director: Bill Weiner, Weiner Association Management Directors: (terms ending end of 2014) Chelsea Gorczyca, The Belwether Group, LLC Steve Grossman, CPMR, GM Partners *Meghan Peake, CPMR, The Barrington Group (terms ending end of 2015) Jacob Bang-Knudsen, CPMR, Bang-Knudsen, Inc. Frank Brady, Brady Marketing Company John Grob, J. Grob Associates, Inc. Kent Kulovitz, Kulovitz & Associates, Inc. *Member of Executive Committee Home • Housewares • Gourmet • Hardware Multiple-Line, Field Sales Professional: If you’re not a member of IHRA, you owe it to yourself to join the organization that is your voice in the industry and the manufacturers’ resource for finding Well-Qualified, Performance-Proven, Field Sales Professionals For complete information about “first-timer” membership and an application, contact us at: 847.748.8269 Fax: 847.748.8273 info@ihra.org • www.ihra.org Past Chairs John M. Clampitt Steve Grossman, CPMR Jay L. Cohen Tom Rooney Peter Bang-Knudsen Donna Peake Jim Adams James Ayotte David Silberstein Kent Kulovitz Mark Glotter Staff Administrative Assistants:Stephanie Baron Financial Director: Myra Weiner Page 10
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