How to terminate a sales representative or distributor
Sometimes salespeople don’t produce. On the interview they oversold their ability. To retain or grow revenues, you need to cut ties when it becomes apparent your salesperson is not part of your “A team.” Written sales representative agreements can be terminated by invoking the termination provisions in the employment agreement or according to the state laws governing alcoholic beverage sales agency agreements and (contracts in general). These laws vary from state to state.
The first step in breaking a business relationship is to identify and read the termination clauses in the employment agreement. Typically there are procedures relating to termination “for cause” and “not for cause.” In the case of non-curable breaches, a letter of termination with the breach details is all that is necessary to end the relationship. In the case of termination for cause, there are generally specific procedures for curable breaches that require written notice of the wrong doing and a period to correct the problem. Performance related clauses are typically curable breaches requiring written notice of the alleged branch. If the breach is not rectified in the stated period, a written letter of termination can be sent to end the business relationship.
It is best to work with an attorney if you are planning to terminate a sales representative or distributor. The letter of termination often results in a litigious response. Even if the situation is mutually desired, there are issues to address such as the handling of current inventory, transition of label approvals and registration, and other post termination matters.
About Tracy Jong
Tracy Jong has been an attorney for more than 20 years, representing restaurants, bars, and craft beverage manufacturers in a wide array of legal matters. She is also a licensed patent attorney.
Her book Everything You Need To Know About Obtaining and Maintaining a New York Retail Liquor License: The Definitive Guide to Navigating the State Liquor Authority will be available next month on Amazon.com as a softcover and Kindle e-book.
Her legal column is available in The Equipped Brewer, a publication giving business advice, trends, and vendor reviews to help craft breweries, cideries, distilleries and wineries build brands and succeed financially.
She also maintains a website and blog with practical information on legal and business issues affecting the industry. Follow her, sign up for her free firm app or monthly newsletter.
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