Friday, July 15, 2011

Legal Issues –Agreements with Stores

You’ve got the etsy shop, you’ve done the art fairs and now what? Maybe it’s time to try selling your work through stores! This blog post presents a brief overview of the agreements you might have with stores that sell your work.

In general, stores will carry your work under one of two kinds of agreements: wholesale or consignment. Occasionally a store may use both.

Under a wholesale arrangement, the store will buy your work outright. Stores typically expect to make their wholesale purchase at a percentage of retail; normally 50% or less. However, once the transaction is completed, the store owns the products and, unless there are unusual provisions in your contract, it can price or sell them in any way it wants. Remember, you may not want customers to see your work on clearance!

Consignment is a little more complicated. Under a consignment arrangement, a store (the consignee) agrees to carry your work but you (the consignor) continue to own it. The store will generally agree to sell your work for a certain price, and to compensate you at a certain percentage of the selling price within some period of time after your work sells. Some stores will charge you a fee for consigning your work.

Many store owners prefer consignment because you, the seller, bear the risk that the items won’t sell. Logically, you should receive a higher percentage as compensation for this risk, but not all store owners embrace this practice.

In addition to your percentage, consignment agreements should specify:

ü the length of the consignment period;

ü whether the consignment period can be renewed and how (e.g., at the store’s option or by mutual agreement of the store and the seller);

ü whether the store can discount the price of your work;

ü whether you can remove work before the end of the consignment period;

ü how the store will inform you when your work is sold;

ü whether you can restock or replace work that is sold;

ü who bears the risk of loss if the work is lost or damaged;

ü who pays for any shipping expenses; and

ü how and when work is returned to you at the end of the consignment period.

Each of these provisions should be negotiable, but many store owners are reluctant to change their standard agreements. Sometimes a store will be more flexible about a non-financial provision, such as your ability to take your work out before the consignment agreement ends.

Should you choose wholesale or consignment? Generally, you don’t get the option. Most stores will tell you how they deal with vendors. However, you may be able to convince a store that normally buys wholesale to try something more risky on consignment.

Good luck and be sure to comment and share your experience!


Gabrielle Lessard

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