A recurring and distressing issue within the newsagency channel involves legally binding agreements with marketing groups. It is not uncommon for a newsagent to feel trapped in a multi-year contract that is not delivering the promised benefits, after being persuaded by verbal assurances that are not reflected in the written terms. This situation can cause significant financial and emotional hardship.
To avoid such predicaments, we urge newsagents to exercise extreme caution and diligence before entering into any partnership with a marketing group.
The Primacy of the Written Contract
The single most critical step is a thorough review of the contract. Make sure you understand it. Take your time. Push back on pressure.
- Read the entire document: Every clause, including the fine print, must be read and understood. The terms outlined in the document are what is legally enforceable, not what is said in a meeting or on a phone call.
- Disregard verbal promises: A salesperson may suggest that terms are flexible or that an exit is possible if the partnership is not working. Unless this is explicitly written into the agreement, such statements should be considered non-binding. The decision to sign must be based solely on the text within the contract.
- Identify the minimum commitment: Locate the clause specifying the minimum term of the agreement. This is the locked-in period. Newsagents must be certain they are willing to commit to the group for that entire duration, regardless of performance.
- Do not sign under duress or uncertainty: If any part of the agreement is unclear or causes discomfort, do not sign it. The period before signing is the point of maximum leverage. It is better to walk away from a potential agreement than to be locked into an unfavourable one.
Navigating Common Scenarios
The persuasive sales pitch: New business owners are often a target for charismatic sales representatives. It is important to remember that this is a business transaction. The goal is not to form a friendship but to secure a service that will demonstrably help the business thrive. Scrutinise the business value proposition, not the personality of the salesperson.
Buying a pre-branded business: When purchasing a newsagency that is already affiliated with a marketing group, buyers may be pressured to sign with that group to retain the existing branding. A common tactic is to suggest the buyer will be liable for de-branding costs if they refuse. This is often incorrect. The responsibility for fulfilling or terminating existing contractual and branding obligations should rest with the seller prior to the completion of the sale. A buyer should not be misled into believing they must continue with an incumbent brand if it is not the right choice for their business.
Evaluating the True Value of a Brand
Before committing, newsagents should conduct their own independent assessment of the marketing group’s brand.
- Public perception: What does the brand stand for in the eyes of consumers? How is it recognised in the market? Seek answers from shoppers and the local community, not just the group’s marketing materials.
- Brand consistency: It is a known issue in the channel that brand consistency can be low. Visiting ten different stores within the same group may yield ten very different customer experiences.
- Your local brand: Ultimately, the most powerful brand is the name of the newsagency itself and its reputation within its community. The success of the business will primarily be driven by local efforts, service, and engagement.
Signing an agreement with a marketing group is a major business decision. It requires careful, dispassionate consideration. An unfavourable contract can lead to years of difficulty. By reading the contract thoroughly, understanding every term, and being confident in the decision, newsagents can protect their business and their wellbeing.
