Posted in Business Start Ups, Employment Law
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So imagine that one day you receive an email from a customer. The email was sent to your sales rep and was copied to you. In the email, the customer says, “Mr. Sales Rep, I will follow your instructions,” and make changes to the purchase order, and send it to you next week to XYZ Company.
You look at the email, and say, “What in the heck is XYZ Company? That’s not even my company name.” What happened was that this XYZ Company was set up by the sales rep, and he was diverting this customer to his own.
In fact, if you want to put it more bluntly, this sales rep was stealing the customers from the company he was working for, YOUR company! So what would you do in that situation? This happens more often than most people think, so it’s what we will go over.
There are three things you can do.
But before we get into that, it’s important to know that it depends on the relationship that you have with your sales rep–whether or not this sales rep is your employee or is a vendor of yours. If he or she has an employer-employee relationship with you, then the approach is a delicate one and should proceed with caution. In fact, you should consult with an employment attorney before you do anything to terminate the employment relationship, so that you don’t need to be entangled in an employment lawsuit by the emotionally-charged employee later on.
If this sales rep is a vendor of yours who you engage to sell your products or services, these are the three things that you can do:
One, you pull out the contract and review in detail what are the rights and responsibilities of each party. Particularly look for the definition of what causes the breach by the parties, how to terminate the agreement, the rights to compensation for the sales rep before and after the termination, and what type of damages are available to you.
If the agreement gives you rights to terminate, take steps as prescribed in the agreement. If not, then determine what is the cost if you decide to move forward with the termination of the agreement, and what options are available to you to end this business relationship. Obviously, if this sales rep is stealing your customers there is the issue of his integrity. I don’t think I would do business with him any longer. So you need to know exactly what you can do to terminate this agreement.
The second thing you should do is to assess the damages sustained by your company. Exactly what kind of damage did this person cause to your company? That depends on the level of the damage. You can either consider settling with this person amicably or you could consider a little bit more drastic approach by filing a lawsuit to recover damages, in which case you need to think about how likely it is that you can recover damages if the lawsuit is filed.
Generally speaking, I always recommend to have an early resolution and try to avoid lawsuits. It is my belief that in most situations, filing a lawsuit is not a good solution to solve a business dispute, and the money and effort needed to execute a well-planned litigation can be better spent somewhere else in your business that can create an equal, if not greater, positive impact. The decision is really depending on each situation.
So you need to consider what are the damages that your company suffered, whether or not you can recover from this person, and whether or not you can recover with this person amicably, or settle with this person amicably. Or you need to go to court to address the issue.
The third thing is that while the memory is fresh you need to set aside documents that support your claim of this sales rep’s wrongdoing. This way in case you need to go to court, you will have organized the supporting documents while your memory is still fresh, which is much easier to do than waiting for time to pass. Write down a summary with key facts or a chronology. It will be helpful later when you need to access the information.
At the same time, you need to figure out what compensation your company may owe to this sales rep. Even though you want to terminate his contract, the fact is there may be commissions owed by your company, and you are still obligated to pay this person. So you need to do an accounting as to what was owed and what is the obligation under the contract regarding the commissions.
The final step is to contact this person nicely and invite him or her to your office and have a little talk. Again, I’m always in favor of an early resolution of disputes. I know that sometimes we’re really mad, especially it’s your company. Somebody’s doing this behind your back and you’re really pissed off. But most of the time, if you’re level-headed, you’ll come out ahead in dealing with this kind of situation. You know, get it over with. Get it settled, and everybody moves their own ways.
Until next time, talk to you soon.
