A few years ago, I went to a small company & found what I was looking for. Thought it would be a dynamite product for our industry and offered to introduce it to a niche market. I wrote up a short agreement outlining terms. Got a handshake on it. We brought Involution an initial contract that same year, but they had trouble filling. The client gave up. We continued to retail their product over the next several years despite supply issues. With the product we had atheltes set world records, we won all major events and got a real buzz going. Just this year a fairly major player went to Involution directly and are basing their entire lineup on the Involution product. The contract may be worth $150-200K or more so far? Only a guess. Involution had mentioned they had done some trivial work many years prior for this company.
No talk of any commissions of course, and the subject hasn't been broached since we still use their product in ours. Involution said they will continue to supply us with favourable pricing.
Now in another sport I have almost the exact same situation. A company in doldrums, no pizazz but a really cool product if presented properly. How do I make sure we are compensated if the thing blows up again??
This is the agreement I wrote (names are ficticious)...
Market Development Agreement
Between: Involution Sports Inc. and Howard’s Engineering Inc.
Effective on mm/dd/yy
It is Howard’s Engineering’s intent to further develop & market products to the surfing market. Howard’s Engineering intends to supply OEM’s and manufacturers (e.g. Goodie boards) showcase the technology via the Howard’s Website and to offer on-line retailing of the technology.
Purpose
The purpose of this agreement is to outline Howard’s Engineering activity, secure supply and specify commissions and royalties paid to Howard’s Engineering Inc. Howard’s Engineering intends to use proceeds to fund growth, marketing and developments. Our goal is to establish a full-time product manager for the Involution technology.
Markets, Customers and Sales
Howard’s Engineering has directly established a customer base comprising of firms, retailers, pros and individuals. Since we are promoting the Involution name, there are no barriers for customers in the referenced market segment contacting Involution. Consequently the indirect sales from the surf and skate market are also under the jurisdiction of this agreement.
Commissions and Proceeds
In order to fund growth, income in the form of commissions and royalties placed on sales is necessary. The following schedule outlines the amounts:
Amount
Web Retail Markup %
Direct Sales (OEM) 20% **
Indirect Sales (OEM) 20%
Consumer Referrals, Walk ins, etc. Markup %/2
** or as Negotiated
Revisions
Signed Howard’s Engineering
