Newsagents need to take care before signing documents in the course of running their businesses. One former newsagent I have been working with for the last few weeks has found a contract come back and bite. The new owner has advised he will not continue a supplier relationship. The supplier has gone back to the original newsagent to seek financial compensation for this. It looks set to take a large proportion of goodwill.
What looked like a good deal two years ago with bucketloads of cash up front is now expensive for the former newsagent.
Despite the sales pitch of some, there is no such thing as free money. Up front payments by a supplier used to win business are usually clawed back over time in a contract.
If you don’t plan on owning the business for the full term of the agreement then either don’t take the cash or don’t sign with the supplier. Otherwise you could find yourself in the same position as my friend – facing the prospect of legal action or paying compensation for the decision of the new owner.
what supplier was this? you have been careful not to mention the name of the company, but can you state what area of business this supplier is in?
Tony,
I can only assume that it’s one of the Card Suppliers.
Manni
Tony, I am not going to name the supplier here.
We had this happen in a previous newsagency and yes its a major card supplier. We had to pay the difference in balance of contract time. Yet the new owners still continued with the supplier but under new terms, as they thought we were ripping them off. Never will sign a contract with them again.
Chris, this is another reason to not take money. There is a cost. We are better off making more from rebates and banking the benefits as we go.
Could you tell me what they are after . I am on my 2nd 5year term ,do not owe any money but i am still well short of the sales stated amount in the contract .Are they going after for the short fall in the target amount or the profit the are short from the target amount or those who still owe money , is it to do with fittings
Bill, It relates to cash paid upfront at the time of signing an agreement with a supplier. Some Newsagents receiving this think of it as their money and tend to forget about it when they sell the business. Others claim to have been told at the time of signing that there are no handcuffs and sign without reading and understanding the contract.
Bill you need to be very careful if you dont hit sales targets in the contract,i sold a newsagency three years into a 5 year deal ,i was 14% short on prorata sales targets at that time and they re billed me the WHOLE advance i was given to sign on which i had used on a fitout,when i sold,and no prorata rebate was paid at all,its a big trap ,and im quite happy to tell you it was John Sands who i had my contract with
we didn’t have a sales target and it wasn’t johns sands. Just up front payment to help out, around last recession but paid the price back to them. Still deal with them in our new shop but no contract or payment just on our terms