A newsagent approached me last week for help with a five-year contract they signed a few months ago. They don’t want to continue the supplier relationship, saying they are not getting the services and business benefits that were promised. The problem is this particular agreement – it is tight, leaving little room for the newsagent to end the relationship. Worse still, they are forced to not sign with a competitor for a year after the end of the contract. So, it’s a six year contract.
Their only course of action is to complain to the ACCC and seek mediation or legal action. Financially this is not an option.
This is a reminder to all newsagents faced with a long-term contract to sign. Take your time, make sure this is a relationship you really want.
It’s easier to leave a marriage than this agreement.
I always think that if a supplier pushes hard for a contract, there must be something wrong with their product or service. If they are as good as they claim, they shouldn’t need iron-clad contracts to ensure business.
talking of contracts , I am about to start looking at a new Card supplier because the one i am with has decided to start filling up the local post office with the same cards and i am not a real happy about it ,being a small town it is stupid to flood the market with the same product .Anyone have any tips on what to look for when it comes to making a deal with Card suppliers . The previous supplier paid for the stands and also the stock is this the norm?
Wow 5 year contract, that’s a long time in this rapidly changing industry.
Shauns,
There’s a few things to consider when looking at greeting card contracts;
If the supplier bought the stand for you, they own it. You might find your current contract either allows them to charge you either 10% or 20% of its original value if you change to a competitor. Some companies will also reserve the right to remove the stand at THEIR discretion.
If they supplied you with stock for free, the contract may require you to pay the full cost of the initial invoice as a penalty for leaving the contract early, whilst others will ask for the depreciated value of the stock based on how long the contract still has to run.
Some contracts will also have a sales volume you are required to achieve before it ceases to be valid.
When negotiating with suppliers you need to make sure you cover these issues.
You need to remember that if a supplier invests $10 – 20,000 in your store, they need to ensure they get a return on their investment in the long run.
Having said that you need to cut a deal that gives you the most flexibility as its hard to know what your own situation will be several years down the track, let alone whether the supplier is going to consistently perform over the period of your agreement.
I say this as a supplier not a newsagent. I do believe everybody benefits when the game is played fairly, too often stores sign up for long term agreements without fully knowing the implications.
Hope this helps.
If they are not getting the services offered in the contract then wouldn’t contract be over on the suppliers behalf .
Newsagents often say they won;t deal with a supplier who supplies another business. The thing is often the customer crossover is not what you expect.
My post is not about card company contracts.
Steve , my contract finished 12 months ago so I own it all now well so the contract stated ,each year the % was less and then it was 0% .
Mark you should name the supplier if they are doing the wrong thing so the next agent does not get burnt by them