Even if you’ve worked with dozens of sales reps, as has artist Terri Floyd of Laughing Moon Productions, every once in a while you may find that breaking up is hard to do.

“Usually it ends peacefully because the artist and rep agree there’s not that much at stake and they call it a day,” says Floyd. “But I’ve heard of cases where the artist left before the contract was over and the rep tried to hold them to it.”

For Floyd, who creates collectible toy crafts and clocks, things got ugly when one disgruntled rep refused to return samples and “bad-mouthed” Floyd to several accounts.

Margaret Romero, who makes handcrafted tuffets, also went through a challenging breakup with her sales rep. After a series of misunderstandings regarding a trunk show, 10 stranded tuffets and an unexpected freight bill, the relationship ended in a standoff; the rep refused to return samples until she got her commission check and Romero refused to send the check until she got her samples back.

Can the break-up be amicable?

Are there any secrets to peacefully ending a rep relationship? Although you can’t anticipate every post-termination problem, you can predict and discuss the major “what ifs” when you negotiate the rep agreement.

Returning samples. Your agreement with a rep should establish that the samples, even if they are in the hands of the rep, remain the property of the artist and that they must be returned either upon termination of the agreement or upon 30 days notice from the artist.

“You have to be careful when a rep asks for more and more samples,” says Floyd. “Some reps make their living by selling samples.”

Floyd uses another approach to recovering samples — what she calls “memo billing.” Floyd sends each rep a sales kit, a trademarked canvas bag with a complete sales book, along with three samples of the work. “We bill for the samples cost and the cost of the rep book usually $50 or $60,” she says. “When contracts are up, the rep can buy the samples or return them. If they don’t return the samples, we apply the billing against the remaining commission.”

Post-termination comis-sion fees. Generally, an artist pays the rep 10 to 20 percent of revenues generated by the rep (although licensing reps may earn 33 percent). Reps feel that payments for accounts created during the agreement should continue after termination. Otherwise, the artist could abuse the relationship by firing the rep immediately once accounts have been established.

Resources

Arbitration and mediation provisions for your agreement can be found at the California Lawyers for the Arts Web site (www.calawyersforthearts.org). There are several online mediation/arbitration services including Mediate.com and Online Resolution (www.onlineresolution.com). You can learn more about traditional face-to-face dispute resolution through the American Arbitration Association (www.adr.org) and Volunteer Lawyers for the Arts (www.vlany.org).

On the other hand, artists don’t want these payments to continue forever. The rep agreement should therefore contain a provision that establishes what percentage the rep earns from reorders from rep-established accounts after termination. You can negotiate limits on these payments. For example, you can agree that these rep payments end after six months or that commissions diminish 50 percent after six months and then stop completely after one year.

What if your rep contacts a gallery on Monday, you fire the rep on Tuesday and on Wednesday you contact the gallery and get an order? Do you owe the rep a commission fee?

If your rep agreement includes this type of post-termination fee, request that the rep periodically (say, every six months) furnish you a list of people who were solicited during that period and ask for a complete list at termination.

You can also negotiate limits on these types of rep commissions. For example, you might only be obligated to pay the rep for new accounts opened within three or six months prior to termination or that rep payments for these new accounts are only due for a fixed period of time.

The key with any commission negotiations, says Floyd, is “to hold the rep’s fee to the fire” — that is to make sure that rep payments reflect rep performance.

Dispute resolution. One way to handle post-termination disputes is to figure out a method of resolving them ahead of time, such as a mediation or arbitration provision in your rep agreement. In mediation, the mediator helps the parties reach an agreement by negotiating and advising. In arbitration, an arbitrator listens to the evidence and makes a decision that may or may not be binding (depending on what you agree upon ahead of time). There are many arbitration and mediation choices for small businesses both online and off.

Attorney fees. Another approach to resolving disputes is to penalize the party at fault by making them pay the other side’s attorney fees. Although few rep disputes require attorney intervention, if the amount at stake justifies a court case, you’ll be glad your agreement included an attorney fees provision, such as: “In a dispute arising out of or related to this Agreement, the prevailing party shall have the right to collect from the other party its reasonable attorney fees and costs.”

Beware of jurisdiction provisions. Beware of a rep agreement that contains a provision requiring you to travel to and submit to the jurisdiction of the courts in the rep’s home state and county. If you have any negotiating leverage, ask the rep to remove this provision from the agreement. Don’t be shy, despite what the rep may tell you, all terms are negotiable.

Look before leaping. Finally if you are planning to terminate your rep, or you anticipate that the rep will be terminating you, think about all your options before making the final decision.

How much inventory is currently tied up in rep accounts? Can you be sure that you can recover the inventory or manage the accounts on your own? Remember, termination is not the only choice. For example, you may be able to renegotiate your arrangement or commission percentages.

“I made two mistakes,” says Romero. “I should have set up the contract so I withheld the first commission check to guarantee my pieces would be returned when the relationship ended. My bigger mistake was getting involved in a dispute when I had $5,000 worth of merchandise in [the rep’s] control.