T-Shirt Forums banner

1 - 10 of 10 Posts

·
Registered
Joined
·
15 Posts
Discussion Starter #1
Hi,

I own a small home based t shirt brand and I have recently been approached by a sales rep who would like to get retail stores in NYC to carry my products.
She is asking for 25% of the profit for each shirt she sells and in addition, she is asking for a 5% royalty for the next 10 years for each retail account she sets up.

Is what she's asking reasonable? Is there any kind of industry standard regarding the % of profit she should get and the length for the royalty she wants to collect?

thanks!
 

·
Registered
Joined
·
6,680 Posts
Two things stand out to me.

25% of the profit... It's usually best to set the percentage against gross sales, not profit. From your perspective, you shouldn't want your rep to know what your production costs are. Unless they are taking on sourcing responsibilities as well.

5% royalty for the next 10 years... I've never heard of this before. I know reps expect to get paid for any sales within their territory even if they did not facilitate the sale. But this seems a bit excessive. Let's say they sell a low volume order to a store, then never sell to them again. Then you sign with another rep or take on the account yourself. They get 5% for the next 10 years? I hate to say it, but this almost sounds like a scam.

Is this someone you know? Do they have any references or can they provide a list of retailers they actively sell to? I guess if they are going to sell to retail stores that you would never get into on your own, then they could be worth what they are demanding. But if you are not sure, be careful what you agree to.
 

·
Registered
Joined
·
2,910 Posts
No way would/should they get royalties !!!
They have no part in the design process.
Watch out. I agree, sounds like a possible scam.
 

·
Registered
Joined
·
112 Posts
I agree. I was a sales rep with a screen printing company while we were starting our embroidery company and I received 10% of the total sales. Now that we contract out our own screen printing and work with a small sales staff there is NO WAY I would agree to ANYTHING for a 10 year period. That's waaayyy too long to agree to anything aside from the person you want to marry and the people you want to raise! LOL
 

·
Registered
Joined
·
39 Posts
This is totally bogus. I'm guessing he/she is new to sales representation themselves because they'd know they're at least 10% over the standard commission rate. Which is not to say established reps won't use you to pay their bills but they do it via a monthly retainer or showroom fee with no compensatory actionables (front glass, first out of the case etc but then it's hard to get it if you're not proven). The royalty fee cements it. You should tell this person they should at least do a little reading on industry norms before they totally destroy themselves before they start. If they don't keep up on their own end, why would they on yours? Life is too short.
 

·
Registered
Joined
·
15 Posts
Discussion Starter #7
Thank you everyone for your input. I really appreciate all the feedback that I've received!
 

·
Registered
Joined
·
996 Posts
An independant rep usually gets 20% of the gross and usually has a set territory. Even if he does not make the sale but it is in his territory, he gets the commission. Don't give a % of profit. Also it's his or her's job to bring in new customers or accounts and that is part of their job and they should not receive anything other than the normal commission for that.
 
1 - 10 of 10 Posts
Top