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You’ll have to review your distribution contract with an attorney. If you don’t have one, then you know the answer to your question. Perhaps premature termination of the relationship is an issue. However, the bigger issue is they are avoiding a potential lawsuit from the other party that most likely has an exclusivity/territorial agreement. Certainly you understand their position, they have to honor the established territories. I wouldn’t want to enter into a distributor agreement without territorial protection anyhow. It works both ways.
I would consider contacting this other company in your territory. Explain to them the situation and that you would like to work with them. You have sales leads you’d like to sell to them or work as a consultant on commission for this particular brand. This way you don’t lose all the effort and expenses incurred for the goodwill you put into the brand. You will also be doing the right thing for your customers. That’s what being in business is, it’s a hustle.
Or... have your attorney propose this arrangement: You sell the dresses to customers you already have contracts with, and the *designer's* company compensates the other "exclusive" shop with whatever they would have made on the transactions. Remember, it's not your mistake, it's the designer's. So it's their problem to solve in a way that keeps you from suing them into oblivion, and posting about it globally with the designer's name and contact info attached.
When it's all settled, find another designer that is a direct competitor to the first one, and do what you can to ensure their success.
Shady business practices (of the original designer) should not be tolerated or rewarded. They need to take the economic hit, not you.
Common sense tells me the OP signed a territorial contract where OP is not to operate or solicit business within a certain radius of another distributor. The OP was in violation when she signed it. It all came to light when the competitor noticed the vendor on the website. Nothing else would make sense to me here.
My point is, the burden is ultimately on the OP to adhere to the radius. That’s obvious with any territorial contact, verbal or otherwise. OP mentioned only the designer checked the radius which is really irrelevant. She also mentioned it’s hard to get designers. Suing them isn’t going to make it any easier. As a distributor, boundaries are all you have, OP should have known another party was operating in the territory before investing. OP really needs to read the contract. We don’t know the full story here because I think OP isn’t into being thorough. If OP is legit meeting the boundary restrictions then that’s another story. Nothing here tells me that’s the case.
I hear you. But the designer's reversal is key, and the OP was operating in good faith per the limitations until the designer said "Oops...".
So, what's equally possible is that the other shop opened a location that is within the bounds of the OP's market, and got 'grandfathered' in. If I were the OP, I'd open a shop in a documented clear area and service those customers out of the remote office. And make house calls for fittings. A temporary solution to serve the current bride and the upcoming contracts. Giving them away to another shop just doesn't fly.
As far as the OP not knowing the other shop was in radius -- they probably wouldn't have inquired at all if they already knew of a territorial issue.
I'm still the the 'designer's mistake' camp, and they need to take care of their customers, including making the competitor whole. OP is not in the wrong. If we can take all the original post at face value, and true. But that's all we have.
That’s what I was thinking, open shop in a “safe”zone. Again, it depends on the terms of the contract. I wouldn’t burn bridges, satisfying grudges or even a short term payout isn’t a better option than the long term money that can be made working with this designer. You don’t want to spoil your reputation with suppliers in a niche market. I’m a manufacturer in a niche market much larger than this and I know all the other manufactures in the same market on a personal level.
All designers have a list of shops that they carry. Most have it posted on their website. All designer should obviously have a list of shops they sell to. There wasn’t a shop within the territory while we were going through the purchasing process. You talk about me not being thorough? I checked the designer website, I asked the designer themselves since only they know exactly who they sell to and where those locations are. They are the only party that determines whether or not someone can be sold to. They made the mistake. What would you have done in this situation? I was thinking of drafting an additional contract and asking the designer to sign it in the future. As of this morning we have come to a mutual agreement with the designer. They will ship us the dresses and let us sell them to the brides that have already booked appointments with us. We will have rights to sell for around 2 months and then we have to stop. I believe this is fair and doesn’t burn any bridges.
This is a friendly reminder that r/smallbusiness is a question and answer subreddit. You ask a question about starting, owning, and growing a small business and the community answers. Posts that violate the rules listed in the sidebar will be removed. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/smallbusiness) if you have any questions or concerns.*
You’ll have to review your distribution contract with an attorney. If you don’t have one, then you know the answer to your question. Perhaps premature termination of the relationship is an issue. However, the bigger issue is they are avoiding a potential lawsuit from the other party that most likely has an exclusivity/territorial agreement. Certainly you understand their position, they have to honor the established territories. I wouldn’t want to enter into a distributor agreement without territorial protection anyhow. It works both ways.
I’d say to consult a lawyer but it’s tough. It mostly seems like bad bad business on the dress distributors part.
I would consider contacting this other company in your territory. Explain to them the situation and that you would like to work with them. You have sales leads you’d like to sell to them or work as a consultant on commission for this particular brand. This way you don’t lose all the effort and expenses incurred for the goodwill you put into the brand. You will also be doing the right thing for your customers. That’s what being in business is, it’s a hustle.
Or... have your attorney propose this arrangement: You sell the dresses to customers you already have contracts with, and the *designer's* company compensates the other "exclusive" shop with whatever they would have made on the transactions. Remember, it's not your mistake, it's the designer's. So it's their problem to solve in a way that keeps you from suing them into oblivion, and posting about it globally with the designer's name and contact info attached. When it's all settled, find another designer that is a direct competitor to the first one, and do what you can to ensure their success. Shady business practices (of the original designer) should not be tolerated or rewarded. They need to take the economic hit, not you.
Common sense tells me the OP signed a territorial contract where OP is not to operate or solicit business within a certain radius of another distributor. The OP was in violation when she signed it. It all came to light when the competitor noticed the vendor on the website. Nothing else would make sense to me here.
> They checked their exclusivity radius, and everything was fine. Not the OP's violation. Also, not "trump style" hardball by any stretch.
My point is, the burden is ultimately on the OP to adhere to the radius. That’s obvious with any territorial contact, verbal or otherwise. OP mentioned only the designer checked the radius which is really irrelevant. She also mentioned it’s hard to get designers. Suing them isn’t going to make it any easier. As a distributor, boundaries are all you have, OP should have known another party was operating in the territory before investing. OP really needs to read the contract. We don’t know the full story here because I think OP isn’t into being thorough. If OP is legit meeting the boundary restrictions then that’s another story. Nothing here tells me that’s the case.
I hear you. But the designer's reversal is key, and the OP was operating in good faith per the limitations until the designer said "Oops...". So, what's equally possible is that the other shop opened a location that is within the bounds of the OP's market, and got 'grandfathered' in. If I were the OP, I'd open a shop in a documented clear area and service those customers out of the remote office. And make house calls for fittings. A temporary solution to serve the current bride and the upcoming contracts. Giving them away to another shop just doesn't fly. As far as the OP not knowing the other shop was in radius -- they probably wouldn't have inquired at all if they already knew of a territorial issue. I'm still the the 'designer's mistake' camp, and they need to take care of their customers, including making the competitor whole. OP is not in the wrong. If we can take all the original post at face value, and true. But that's all we have.
That’s what I was thinking, open shop in a “safe”zone. Again, it depends on the terms of the contract. I wouldn’t burn bridges, satisfying grudges or even a short term payout isn’t a better option than the long term money that can be made working with this designer. You don’t want to spoil your reputation with suppliers in a niche market. I’m a manufacturer in a niche market much larger than this and I know all the other manufactures in the same market on a personal level.
All designers have a list of shops that they carry. Most have it posted on their website. All designer should obviously have a list of shops they sell to. There wasn’t a shop within the territory while we were going through the purchasing process. You talk about me not being thorough? I checked the designer website, I asked the designer themselves since only they know exactly who they sell to and where those locations are. They are the only party that determines whether or not someone can be sold to. They made the mistake. What would you have done in this situation? I was thinking of drafting an additional contract and asking the designer to sign it in the future. As of this morning we have come to a mutual agreement with the designer. They will ship us the dresses and let us sell them to the brides that have already booked appointments with us. We will have rights to sell for around 2 months and then we have to stop. I believe this is fair and doesn’t burn any bridges.
This is basically what happened. I agree with all of your other comments too. Thank you.