Sales Partners - Agents, Distributors, Licensing And Franchises
By Stuart Ayling, Fri Dec 9th

When I'm speaking with clients who are looking for ways toexpand their business the conversation often comes around to thepossibilities of using agents, distributors, licensingarrangements or a franchise.

These sales partners have a lot to offer. But it's important tounderstand what each type of partner means for your business(equally so for online enterprises).

The term 'franchise' has become a common way of describing abusiness relationship where the franchisor allows other peopleto sell their products or operate the same type of businessunder the same name, usually within a designated area. But thereis more to it than that. Much more. Legal obligations,management control, customer service and pricing are involved.And often 'franchise' is not the correct term for therelationship being offered.

Let's Have Some Definitions... Agent: A representative for yourcompany who will find buyers and sell your products. Paid bycommission on sales achieved. Stock is not usually held by anagent.

Distributor: An enterprise whose business is to buy merchandisefor resale, usually to retailers or other industrial andcommercial users.

License: A formal permission or authority to do, or not to do,something which otherwise would be a legal wrong. Often usedwhen dealing with merchandise or procedures protected bytrademarks and patents.

Franchise: A privilege granted by one organisation (thefranchisor) to another (the franchisee) to sell, produce or useits products. Different types of franchises include: * A productfranchise - which acts as an outlet for a particular product. *A system franchise (usually called a business format franchise)- which is authorised to conduct business according to a systemdeveloped by the franchisor. * A process or manufacturefranchise - for which the franchisor supplies a criticalingredient or the know-how for a production process.

According to the Franchise Council of Australia the most commonfranchise method is the business format franchise, with 708different systems being offered in Australia.

Typically each type of sales partner is subject to geographicrestrictions of some kind, such as a pre-defined territory.Depending upon the situation this may be part of a metropolitanarea, a state, or an entire country. Ideally the size of theterritory should be based on sales and/or profitabilitybenchmarks. This is sometimes tough to calculate for newproducts and services. 

At times the definitions may overlap. For example a 'manufacturefranchise' may be the same as a 'license' for a manufacturer toproduce certain items. The legal boundaries can be quitepuzzling and expert assistance should always be sought.

Of particular importance is the requirement of a business formatfranchise to offer comprehensive training, support, businessmanagement procedures and marketing programs. Thisall-inclusiveness is a hallmark of a true business formatfranchise. 

It takes a long time to develop the systems and knowledgerequired to create a business format franchise that conforms tothe Franchising Code of Conduct and that will be of interest toserious franchisees.

If you find that your products do not require the intensity ofsupport required by a business format franchise then the othersales partner options may be more suitable.

From a simple commission-based arrangement with an industrysales agent (or broker) to a more formalised licensing deal thatmay offer exclusive territory and advertising support, there areopportunities to get your partners working for you to increaseyour overall sales. 

Don't Just Leave It To Your Partner... However, it's not simplya case of thinking, "Let's sign a deal and let them worry aboutgetting the sales". No matter which option you choose there willbe ongoing communication and support required from you if youwant your sales partner to get the best results.

And there are always potential pitfalls in any relationship.Remember, the less committed your sales partner is to you, thelower your products or services will appear on their prioritylist.  So here are a few things to keep an eye on if you want tostay on track for success:  * Agents - Stay in regular contact.Sell them on your products. Get them excited. Make sure yourcommission is competitive. Do you have an exclusive arrangementwith them? Try to avoid agents who also represent competitiveproducts, as they may have a conflict of interest.

* Distributors - Be aware of how your products fit with theirranging policies. Train their sales team. Help them to promoteyour products by way of co-operative advertising and salesincentives. Stay on top of any seasonal or dated stock. Youdon't want your distributor overstocked with old merchandise(because they will think twice before ordering current stock!).

* Licensees - Make sure your legal documentation is sound. Gaina thorough understanding of your licensees business so you knowhow your product/service is being used. Are they committed toyou for a period of time, number of units, or value of sales?Limit the license to their specific use so you are free to dealwith other licensees.   * Franchisees - Use a franchiseconsultant to help develop your package. Remember your selectionof new franchisees will be of paramount importance - people makethe business! Have procedures to measure customer service levelsand operating standards (use random checks, mystery shoppers,contests etc). Gain co-operation and 'buy-in' from franchisees,rather than confrontation.

Sales Partners Online... It's no news to online businesses thatthey should use productive partnerships to increase their chanceof success. For example: * An affiliate program can be comparedto a sales agent. * Syndicating content can be compared tolicensing (of the information). * Patented code/software iscommonly used under license.

Always do your sums and make sure your choice of sales partnerpresents the best outcome for you. Look for commitment, synergy,innovation and growth potential in prospective partners - yourfuture depends on it.

About the author:Stuart Ayling is an experienced freelance marketer. He hasworked with businesses across many industries to developintelligent, cost-effective sales and marketing solutions. Youcan reach Stuart at mailto:info@marketingnous.com.au or onlineat http://www.marketingnous.com.au