Recommendations for doing without a commercial agent
If you or your company wants to dismiss or dismiss one or more of your commercial agents, terminate the contract and stop working with them, you must have into account various factors to avoid having to pay excessive compensation.
It is recommended to have prior advice that analyzes the specific situation, make a forecast of compensation for clients and damages that the employer could face to terminate the agency contract, and notify the termination of the contract in due time. In this way we could anticipate issues that could be alleged later by the agent to claim a higher amount.
This prior advice can significantly reduce the amounts of compensation and, above all, the possibility of the agent filing a legal claim.
The courts estimate the compensation for clientele by virtue of various circumstances that we explained in our article how to quantify compensation per clientele. It is convenient to take into account all those circumstances mentioned in that article before notifying the agent of the will to finalize the contract. By giving advance notice with the necessary time, we can also reduce the compensation for damages.
Give notice of termination of the agency contract one month in advance for each year of the contract that remains in force, with a maximum of six months. In this way, you will prevent the agent from claiming compensation for damages.
We explained the different compensations that the agent can claim in our article Compensation for ending the agency contract, including the claim for damages for lack of notice.
Will you be entitled to compensation for clientele?
In general, compensation of these characteristics is accepted for the commercial agent. However, it must have provided new clients for the entrepreneur, or have increased the volume of business by its own means.
If one of these two aspects does not occur, the employer may refuse to provide compensation for clientele.
How can I reduce client compensation?
Here are some aspects that can be claimed by the employer to reduce the compensation to be paid to the agent for the clientele obtained or even not pay any amount:
- Impossibility of continuing to generate business.
If the employer certifies that he will not be able to continue generating business for those clients that were recruited by the agent, he will not have to pay any amount for compensation for clientele.
The reason for this compensation is that the employer can continue to receive a benefit for the agent’s efforts, once the relationship between the two has ended and commissions are no longer received by the agent.< /p>
Hence, if the businessman does not continue to market with the agent’s client portfolio, he has no obligation to pay compensation for clients.
- Certify your involvement in attracting customers.
Many times the agent sees his work of attracting business favored by the initiatives of the entrepreneur, his investment in advertising, promotion, etc.
Clientele compensation should only be paid when the agent generated increased business through their own means. So the amount of compensation can be reduced if the employer faced expenses to attract customers.
- Relevance of the brand.
If the agent has worked with a brand “ easy to sell em>” due to its relevance, prestige or notoriety it is understood that the merit of it is minor . The success of the acquisition no longer responds solely to the good work of the agent, but there is an added determining factor in the choice of the client.
- Duration of the contract.
Courts usually admit a reduction in compensation if the relationship between the agent and the employer has been short-lived. Understanding in any case that a short-term relationship is understood to be less than 5 years.
- Agent exclusivity.
In some cases the Courts also admit a reduction in compensation if the agent did not have exclusivity with the employer. That is, when the agent was free to contract with others and share his effort in promoting different products or services. P>
How do I calculate the compensation I have to pay you?
The Agency Contract Law does not establish a quantification criterion but imposes a maximum:
“the compensation may not exceed, in any case, the average annual amount of remuneration received by the agent during the last five years or, during the entire period of duration of the contract if it were shorter”
As we pointed out previously, we explained this issue in more detail in our article how to quantify compensation for clients.
In any case, it must be verified that the agent is not claiming an excess, according to the following parameters:
- The agent may include the gross income from commissions for the computation of the compensation.
- Additional expenses such as office rental, vehicles, gasoline and other per diems cannot be computed to increase the amount.
- VAT cannot be included either.
- Take into account the aforementioned legal maximum of the average annual amount of remuneration received by the agent during the last five years. Compensation that exceeds this figure should not be accepted.
General recommendations for entrepreneurs
- Always give advance notice of the termination of the contract at least one month in advance for each year of the contract that remains in force.
- Do not accept any compensation for clientele if you will not be able to continue generating business in the future after the relationship with the agent ends.
- Do not accept any compensation for clientele if the agent did not improve the amount of sales or acquire new clients.
- Negotiate a reduction in clientele compensation if your brand was already well positioned in the market, if the agent has had a contractual relationship for a short time or if the agent did not work exclusively for your company.
- Never pay compensation for clientele greater than the legal maximum allowed, that is, the average annual amount of remuneration received by the agent during the last five years.
Most common conflicts arising from an agency contract
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