Manufacturers Representative Agreements

Written by Sandy Mitchell
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What Is a Manufacturers Representative?

A manufacturers representative is an independent, self-employed businessperson who agrees to represent a manufacturer's products to buyers and potential buyers in exchange for compensation. A manufacturers rep may represent more than one, usually non-competing, line of products. As a self-employed person, she is generally responsible for paying her own office expenses, taxes, and health insurance premiums.

A manufacturers representative is paid to generate sales. In this capacity, she travels to meet existing clients and potential clients in their homes or offices. She may also represent the manufacturer at trade shows, craft fairs, or conventions.

Typical Inclusions in a Manufacturers Representative Agreement

A typical manufacturers representative agreement spells out, in writing, expectations and duties required of both the representative and the manufacturer. A rep is generally required to accurately represent the manufacturer, promptly process orders, advise management in a timely manner of any conflicts, and to keep in touch with the manufacturer via telephone, e-mail, or in-office visits. In addition, a rep is generally required to inform the manufacturer of any potential conflict of interest, such as representing other product lines.

In exchange for representing the manufacturer, a manufacturers sales representative is customarily paid a commission on sales generated. This may be a straight percentage or on an escalating scale as sales increase. A manufacturers representative agreement spells out these details as well as commissions on sales to existing customers and commission recalls on returns. Both parties generally agree to give 30 days notice of an intent to terminate the agreement.

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