Manufacturers need to be aware of the differences between a full service sales and marketing agency that represents the Seller, and an "In-House Broker", which typically follows a different business model.

FSMA Members can download a printable/emailable copy here. (Password required - email Rick for password)

By legal definition, a full service sales agency (or Sellers Agent) exclusively represents the interests of the supplier, and they have no financial interest or legal control over the buyer, pricing or promotion terms. Full service sales agencies are the "Sellers Agent" providing sales and marketing services to the manufacturer. 

In-house brokers are often referred to as the "Buyers Agent".  They typically represent the buyer in negotiations, rather than the seller, and offer limited sales or marketing support. They may control pricing and promotional terms and/or determine sources of supply on behalf of the distributor.   

Manufacturers should be aware of several differences between a Sellers Agent and a Buyers Agent.

The In-House or Buyers Agent:

--generally are more aligned with the buyer (distributor) than the seller (manufacturer), often having offices and staff employed at the buyer location. This can lead to a possible conflict of interest and loyalty questions as to whom they actually represent.

--sell to only one distributor in a market. This forces manufacturers to use multiple agencies to represent them to other distributors in a market. Higher costs are incurred.

--generally provide little to no foodshow, training or other marketing support.

--allows the distributor to switch suppliers more easily. Distributors can switch suppliers without the usual disruption in agency representation, making suppliers potentially more vulnerable to competition.

--may increase legal risks for manufacturers associated with in-house broker representation if commissions paid are passed through to the distributor, or a manufacturer is forced to use an in-house broker by the distributor. Robinson-Patman and Contract Law clearly prohibit this behavior, and there are substantial penalties. It is solely the manufacturers legal right to choose representation. Contact FSMA for more information on the legal risks.

--limits operator ability to order product from their preferred distributor.

--typically have limited local market knowledge or expertise.

--have no local offices, test kitchen or conference room resources.

--do not maintain a database of local operator information beyond the distributor they work with.

FSMA provides this information to help you make the best possible decision on your sales & marketing representation. 

FSMA Members can download a printable/emailable copy here. (Password required - email Rick for password)