Contracts, Commissions?

[Maverick88]

Good morning, do you all have contracts between yourself and the locations or just a handshake deal? If so, what do you cover in it?

Also, if offering a commission to a location howe do you calculate the commission? Do you go by item and calculate or just assume that 50% or something of the collection is profit and use that?

*To avoid making another post. Do you have insurance? General, product, liability?

Thank you

[Fermo Vending]

All handshake deals for me. I only pay commission at one location, and it's high at 20% of the net. I NEVER offer it- let the location ask for it. I have general liability through Next Insurance. about $300 for the year for a $2 million policy. 

[AZVendor]

Handshake unless its a big contract like with a municipality.  I always paid commission off the gross but off of your fictitious net is better.  Commercial insurance with a Completed Products rider and a million dollar umbrella.

[Fermo Vending]

Come on, AZ; where's the faith? I don't cheat my locations. 

[AZVendor]

My experience has been that most vendors resort to paying off the net so that they can manipulate the commission lower. The ones who are honest are fewer in number. That is my experience. I always paid from the gross because I could always prove that if it was questioned, which it never was, maybe because I was an upfront and honest vendor as were several of my friends and ccompetitors. But we all knew who the lying vendors were.

[putrevus]

It is always better to have contract with the location. The contract protects you when you see staffing changes happen at the location. Three to five years is what we have done with most locations.

 

[AZVendor]

Nah, if the account is small, just has one or two machines and the investment is small it's a waste of everyone's time to have a contract.  They are only there to protect those that can afford to defend them in court and if an account doesn't want you in their location you wouldn't want to force them to keep you.  Contracts are reserved for large locations with huge investments in them and the locations usually require them.

[putrevus]

I disagree, it is not to fight in court or force them to keep you. It is for employees who follow the original person who allowed you put the machines in their facility. Plus it is sort of commitment from location also .They want you to be there for next three to five years. When you have contract,  top management pretty much knows about you not just facilities manager, everybody knows who you are and this is good for communication.

Initially we did handshake agreement but after while we found written contract more binding on both parties in long run. There were no more high price complaints, everything is clear for both parties.

Two machines on a decent location can do 10-12 K per year. All it takes is one standard agreement, which you can use for all your locations. 

Edited July 27 by putrevus

[AZVendor]

Do what you want but I'm speaking from a 35 year level of experience.

[putrevus]

8 minutes ago, AZVendor said:

Do what you want but I'm speaking from a 35 year level of experience.

I am also speaking from my experience and talking to people who are in the industry for 30 years. There is nothing wrong in having a contract. You are not losing anything by having the contract.

 

Plus we found it is always easier to sell locations with contract when you want out.

 

Edited July 27 by putrevus

[AZVendor]

I never wanted out so that wasn't a problem for me. When I did sell it wasn't a problem for my buyer either, but he did provide horrible service after he bought it which prompted my old customers to call me several times. I'm sure he ended up losing all or most of the accounts which was sad after all the years I put into the business. But the selling price put the down payment on my house.