Never Fear to Negotiate

Benjamin W. Bronston, partner, Nowalsky, Bronston & Gothard

As an attorney, I often hear a common comment about agent agreements: “Why should I try to negotiate? The carrier’s not going to change anything.”

Since nothing is more important to the channel than a fair and balanced agent agreement, my response is always the same: “You’d be surprised at the concessions you can get if you simply ask for them.”

While it is certainly true that some carriers are not “agent friendly,” I have found that many realize how important agents are to their businesses and are willing to modify their agreements when a valid concern is brought to their attention.

Case in point: One of my clients had an agreement with a carrier that was purchased by another carrier. This was a great opportunity for my client because the acquisition would permit him to sell more products and cover more territory.

However, the acquirer wanted him to sign a new agreement that contained a minimum revenue commitment in addition to the one he had already signed with the acquired company. My client assumed he would have to agree to the additional revenue commitment, but I suggested that he explain to the acquirer that he had already exceeded the prior commitment and should not be penalized as a result of the acquisition by having to make yet another commitment.

Although reluctant at first to forego their demand for a new commitment, the acquirer eventually relented because they understood the unfairness of the situation and recognized the value that my client brought to the table.

This is just one example of the old saying, “You don’t get what you don’t ask for.”

Many times agents are hesitant to ask carriers for concessions for fear of “losing the deal.” My experience is that agents often underestimate their bargaining leverage. You may not get, for example, “most favored nation” status, but if you bring an important point to a carrier’s attention, the executives often are willing to revise the language of the agreement to address your concern. As I said before, many carriers realize how important agents are to their businesses and try to be accommodating.

The key is making sure that you and your counsel carefully review the agreement, point out all of the changes that are important to you and clearly articulate why the changes should be made, whether for business reasons, legal reasons or a combination of the two. Even if you only “win” one or two points out of 10, the negotiation process is well worth the effort.

Benjamin W. Bronston is a partner with the law firm Nowalsky, Bronston & Gothard. For the past 16 years, he has developed an extensive knowledge of legal and regulatory issues affecting a wide variety of telecommunications companies, including carriers, resellers, agents, master agents and support services providers. He also is a member of the 2008-09 PHONE+ Channel Partners Advisory Board.