I am very agitated by this business issue - am I wrong?

[Ginevra]

I have to change the details on the exact business situation, because I've been forbidden to discuss this elsewhere, but I will keep the problem aspect the same.

 

DH and BIL have been in business building homes together for 15 years. There is a business that we have been in relationship with for most of those years, such that the purveyor is a close friend of BIL. They have hung out in non-business contexts many, many times. Suppose it's an Interior Designer who has worked with us on many houses we've built. (It's not, but that is a parallel.) James of the interior design service, being a friend, has promoted us many times; i.e., he's going to work with someone on a project and they say, "If only we knew a good builder..." and James says, "Oh, I recommend Quill's company. They are excellent!" Thus, if we're building a house and James does the interior design, we pay James a commission for bringing us a client.

 

BUT - here's where it gets strange IMO. James is feeling neglected because of a few clients we've built with who haven't used James for the interior design. James is telling BIL that we should be giving him a commission on all work that we get, because part of our success (he thinks) is due to James' ardent promotion of us and his own prominence in the field. In some cases, we have built for people who were tangentially associated with James; thus, James feels that we wouldn't have built that house at all if we didn't know his friend Bob, who knew the client and recommended us. You follow? I even gave the example of, "If aliens landed on the planet and came and had us build for them, James still thinks he should get a commission?" BIL says, "Yes, because he feels that his promotion of our company is why we're even known to the aliens to begin with." :001_huh:

 

I am very upset about this. I disagree vehemently with it. James was - IMO - threatening us by saying that if we aren't going to pay him for all business, then he can't see a future in promoting us. This is extortion, IMO. BIL does NOT see it this way at all and is defending James' POV. BIL likes the guy as a friend and feels that he is "making sure he can trust us" to utilize him so that he is getting a payoff from his promotion of us. Do friends do this??? It seems totally absurd to me!

 

I have absolutely no problem paying James a commission for any work we get that comes from James' promotion of us as a builder. But NOT if someone knows someone who knows someone who used us in the past, kwim? And DEFINITELY not in the case of someone visiting our website or coming out of the clear blue sky and using us to build their home. WHY does James think he is entitled to ANY piece of this action?!

 

I'm just really agitated right now. I don't think this is something that would be done in ethical business. This sounds like back-door dealing and extortion to me. :(:nopity:

 

There's a good chance I will alter this thread on my better judgement later, so I'd rather not have it quoted in its entirety.

[fairfarmhand]

I agree with you. If a referral did not come directly from that person, then I fail to see why you should owe anyone any money at all.

 

Generally, I've seen business things work out like this with no cash changing hands. For instance, I refer people to you if needed, while you refer people to me if needed. just as a goodwill gesture. it's one of those "what goes around comes around type of things"

 

This other guy sounds like a snake.

[Trilliums]

Does it ever work the other way around where your company builds something without James' involvement, but you recommend his services?

[eternalknot]

I think there's a fair middle ground.

 

James needs to be sure that those he refers MENTIONS him as a referer. The onus is on him, and therefore his referrals, to credit him if he wants to be reimbursed or otherwise acknowledged as a referrer. Maybe as you draw up a contract you can even have a space to enter how you heard about Quill's Company, whether by referral or otherwise.

 

BIL is defending a friend, in a position where he feels he needs to. It's possible he agrees with Quill but for whatever reason still feels he has to defend a person he has both professional and personal relationship with. Since he at least sees James' POV, BIL is the right one to tell James that Quill is absolutely interested in maintaining a professional business relationship and wants to take the steps necessary to maintain one.

 

Affirm that the professional community can (maybe is?) somewhat small, and that unless a customer mentions a referrer Quill has no way to know which referrer to compensate. Appeal to James' business sense. Or ask James to do more than word-of-mouth referrals to promote Quill if he expects commission from all of Quill's projects. Put the ball in his court, saying "Sure we'll commission you on everything IF you're willing to up YOUR contribution by doing X" -- in this way it's a business deal James can either accept or decline, but either way he can't justly complain about any outcome.

 

And if he unjustly complains, that gets around. His business will eventually suffer and his referrals may become worth less anyhow. It'll be a bullet dodged in the bigger picture.

[elegantlion]

Tell James to stuff a roll of designer fabric up....well, wherever it goes best. :lol:

 

Too bad, that is the nature of referral type businesses. He does not deserve commission on all of your business. I hope he is referring people to you because of your quality building and good business ethics. Sometimes the work volume doesn't get evened out in the reciprocal. Too bad.

 

It is also the nature of the beast in construction and this economy. Not everyone uses a designer when building a home. It's easier to reciprocate with plumbers, electricians, finish carpenters, etc. Designers are not necessarily a part of the house building package.

[DarlaS]

Tell James to stuff a roll of designer fabric up....well, wherever it goes best. :lol:

 

Too bad, that is the nature of referral type businesses. He does not deserve commission on all of your business. I hope he is referring people to you because of your quality building and good business ethics. Sometimes the work volume doesn't get evened out in the reciprocal. Too bad.

 

It is also the nature of the beast in construction and this economy. Not everyone uses a designer when building a home. It's easier to reciprocate with plumbers, electricians, finish carpenters, etc. Designers are not necessarily a part of the house building package.

 

I was thinking he was a theoretical designer and may actually be an electrician or a plumber.

 

Did I read that wrong?

 

Either way, he is being a manipulative jack@$$.

[TranquilMind]

BUT - here's where it gets strange IMO. James is feeling neglected because of a few clients we've built with who haven't used James for the interior design. James is telling BIL that we should be giving him a commission on all work that we get, because part of our success (he thinks) is due to James' ardent promotion of us and his own prominence in the field.

I am very upset about this. I disagree vehemently with it. James was - IMO - threatening us by saying that if we aren't going to pay him for all business, then he can't see a future in promoting us. This is extortion, IMO. BIL does NOT see it this way at all and is defending James' POV. BIL likes the guy as a friend and feels that he is "making sure he can trust us" to utilize him so that he is getting a payoff from his promotion of us. Do friends do this??? It seems totally absurd to me!

 

 

Well, not every person who builds a house needs or wants an interior designer. But I realize you may be talking about a trade, or something more essential.

 

I don't think it rises to the level of extortion, but it certainly is pressure that you don't need.

 

I don't like the kickback commission either. Why can't it simply be that you send each other business because you both benefit? It won't be an exact correlation. Having done business with many trades (though not as a builder), I just find this odd. I recommend my friends but don't benefit directly financially from it. Though now and then a tradesman will tell me thank you for sending him X business, and he's going to give me a discount on my work this time.

 

Not expected but always appreciated.

 

Is this commission agreement in writing? If so, you need to review it. If not, you need to have a discussion of expectations and there needs to be no pressure on either side. If the arrangement isn't working, move on.

[elegantlion]

I was thinking he was a theoretical designer and may actually be an electrician or a plumber.

 

Did I read that wrong?

 

Either way, he is being a manipulative jack@$$.

 

maybe not, I may have read it literally. But either way unless this person is directly involved with the building project he doesn't get all the referrals. Just the way it works.

[I talk to the trees]

I think there's a fair middle ground.

 

James needs to be sure that those he refers MENTIONS him as a referer. The onus is on him, and therefore his referrals, to credit him if he wants to be reimbursed or otherwise acknowledged as a referrer. Maybe as you draw up a contract you can even have a space to enter how you heard about Quill's Company, whether by referral or otherwise.

 

BIL is defending a friend, in a position where he feels he needs to. It's possible he agrees with Quill but for whatever reason still feels he has to defend a person he has both professional and personal relationship with. Since he at least sees James' POV, BIL is the right one to tell James that Quill is absolutely interested in maintaining a professional business relationship and wants to take the steps necessary to maintain one.

 

Affirm that the professional community can (maybe is?) somewhat small, and that unless a customer mentions a referrer Quill has no way to know which referrer to compensate. Appeal to James' business sense. Or ask James to do more than word-of-mouth referrals to promote Quill if he expects commission from all of Quill's projects. Put the ball in his court, saying "Sure we'll commission you on everything IF you're willing to up YOUR contribution by doing X" -- in this way it's a business deal James can either accept or decline, but either way he can't justly complain about any outcome.

 

And if he unjustly complains, that gets around. His business will eventually suffer and his referrals may become worth less anyhow. It'll be a bullet dodged in the bigger picture.

 

:iagree:Keep it professional and *get it in writing.* This guy sounds like he could be trouble if there isn't some sort of contract keeping him honest.

[Mommyof4ks]

I agree with you, there is no reason he should get money for every deal that is done. I assume that both businesses promote one another, so that is the way he is getting paid, by referrals by your business and he ges paid for actual work done. Is this guy going to give your family a commission every time he does work even if you are not involved? Probably not, so giving him one does not make since.

[Catwoman]

James is feeling neglected because of a few clients we've built with who haven't used James for the interior design.

 

Obviously, you have no control over whether or not James gets the job. If he's pitching a new client and recommends your company, and then you end up getting the job for your part and he doesn't get the job for his, well, tough luck to James.

 

James is telling BIL that we should be giving him a commission on all work that we get, because part of our success (he thinks) is due to James' ardent promotion of us and his own prominence in the field.

 

Well, if James is such Hot Stuff, how come you're getting jobs and he isn't? If the people were so incredibly impressed with him (although it's pretty clear that no one is more impressed with James than James seems to be,) why isn't he getting all of those jobs? And if he's not getting the job, his recommendation of your company wouldn't mean much to the clients who didn't hire him.

 

In some cases, we have built for people who were tangentially associated with James; thus, James feels that we wouldn't have built that house at all if we didn't know his friend Bob, who knew the client and recommended us. You follow? I even gave the example of, "If aliens landed on the planet and came and had us build for them, James still thinks he should get a commission?" BIL says, "Yes, because he feels that his promotion of our company is why we're even known to the aliens to begin with." :001_huh:

 

Well, that's just stupid.

 

How does James even get in and out of these homes, with his head being so incredibly huge? :glare: Sounds like James has a serious ego problem.

 

I would also suspect that James' business may not be quite as thriving as he claims it is, because otherwise, he wouldn't be trying to extort money from you.

 

He sounds like a real weasel to me.

[Guest]

Does it ever work the other way around where your company builds something without James' involvement, but you recommend his services?

 

Yes, it does. We recommend him openly to anyone needing his services. I even used him with my own personal home.

 

I was thinking he was a theoretical designer and may actually be an electrician or a plumber.

 

Did I read that wrong?

 

Either way, he is being a manipulative jack@$$.

 

Yes, theoretical designer. I still wouldn't mind seeing a roll of fabric being placed where rolls of fabric generally aren't meant to go. ;)

 

Well, not every person who builds a house needs or wants an interior designer. But I realize you may be talking about a trade, or something more essential.

 

Is this commission agreement in writing? If so, you need to review it. If not, you need to have a discussion of expectations and there needs to be no pressure on either side. If the arrangement isn't working, move on.

 

It's not currently. This has always been a friendly mutual back-scratching arrangement where we have both benefitted financially from the network.

BIL is talking about putting something in writing and I told him that I would not agree to the terms James is promoting.

 

maybe not, I may have read it literally. But either way unless this person is directly involved with the building project he doesn't get all the referrals. Just the way it works.

 

This is my feeling on it. Besides, it is the nature of business networks that it becomes excruciatingly hard to tell where a connection was made. I say, unless he obviously talked to someone about buying a purple couch or sat with them looking through fabric samples, then he doesn't have a hand in the outcome. If he did those things - if it is obvious that he was connected to the business, then I am fine with the commission. But if it's because of this person knowing that person who he spoke to two years ago - something like that is not a job where he should be compensated.

[Impish]

I agree w/Cat.

 

James is an ack.

[Catwoman]

BIL is talking about putting something in writing and I told him that I would not agree to the terms James is promoting.

 

I would absolutely, positively, and without question, refuse to put anything in writing with that guy. It sounds like he would be a huge lawsuit just waiting to happen.

[Guest]

I agree with you, there is no reason he should get money for every deal that is done. I assume that both businesses promote one another, so that is the way he is getting paid, by referrals by your business and he ges paid for actual work done. Is this guy going to give your family a commission every time he does work even if you are not involved? Probably not, so giving him one does not make since.

 

This is what my dh said - that James does other business that doesn't involve us at all and we don't see any commission from that (nor would it ever occur to me to think we should have one).

[Unicorn.]

Haven't read all the replies, but James is a bit full of himself.

If James recommends You to Sam, and Sam loves the work, then recommends you to Steve, who hires you, then it is Sam who has done the recommending, and he did so based on the work you did for him. Therefore, James isn't entitled to anything. Period.

 

ETA: and yes, sounds like extortion. I don't think he's much of a "friend" if he's making threats and harrasing you. sounds to me like business is bad for him, and he wants you to keep him afloat

[mirth]

I think what James wants is not called a commission. It is called a royalty. Most OEMs do not want to get sucked in to paying royalties on a per part basis because it gives someone else an unlimited revenue stream. Actually the want to avoid it like the plague is closer to the truth. Even when it is something they can't live without -- like paying a per-part royalty on the flip top of a pressurized soda pop can -- they don't want to do it. So the odd thing is that James wants a royalty even when the final product does not contain one shred of his product.

 

Btw, J is the very definition of entitlement. If you look up the word "entitlement" in the dictionary, there will be an accompanying illustration of him.

[elegantlion]

 

 

 

This is my feeling on it. Besides, it is the nature of business networks that it becomes excruciatingly hard to tell where a connection was made. I say, unless he obviously talked to someone about buying a purple couch or sat with them looking through fabric samples, then he doesn't have a hand in the outcome. If he did those things - if it is obvious that he was connected to the business, then I am fine with the commission. But if it's because of this person knowing that person who he spoke to two years ago - something like that is not a job where he should be compensated.

 

:iagree: This is where construction gets tricksey. Is his business being effected by the economy? It seems he wants to be partnering with you, and you aren't wanting to partner with him. I would think if he gets all of your business, you get all of his, and you're right that's not fair.

 

I would be very careful about signing anything with this individual. My dh got burned a few times when I had specifically warned him. Referrals are great for business, it's nice to have the circle, but when they go bad, I've seen everyone even tangentially involved get burned badly.

[Catwoman]

I think what James wants is not called a commission. It is called a royalty.

 

It sounds more like he wants partial ownership of Quill's business to me. :glare:

 

I don't know James, but I already know I don't like him.

[lovinmomma]

I'm the director of marketing at my work (IMO a glorified Office Manager ;) ) and what he is suggesting sounds like he is basically saying that:

 

1) He is responsible for advertising your business to others and that

2) It is because of him that your business is heard about through the community

3) He should be compensated for the promotion of your business

 

Well, if that's the case and he is wanting you to basically pay him for marketing your business then that comes with responsibilities, too. :D Any time I sign a marketing contract there is always a guaranteed number of sales and profit that much come from those companies that we do our advertising with. If he's wanting to advertise for you then he should guarantee you a certain number of viable leads. ;)

In addition, I do not advertise or promote those that I advertise with. So, if you are changing your relationship to one that you are paying him for advertising I would be quick to let him know that since it's no longer a back-scratching relationship and now a paid advertising situation your company will no longer be doing any advertising or promoting for him. :D

[Anne in CA]

FWIW, I totally agree with you. My cousin was married to a builder who had almost the same situation. It did turn out that when her dh got annoyed and didn't pay for what was not owed the business suffered. I do think that you will see a drop off in business if you go separate ways with James. That is what happened to my cousin. The other person also said some bad things about my cousin, and it took a few years for them to get right financially. That isn't fair, but it is what happened.

[aggie96]

As a business owner, I would add that should you enter into a written agreement with this person, you should have the document drafted by a lawyer. In the grand scheme of things, contracts can not and will not prevent someone from coming after you legally, but it works wonders in mediation/court. We have had this happen to us...and we lived to tell the tale. ;)

[mirth]

It sounds more like he wants partial ownership of Quill's business to me. :glare:

 

I don't know James, but I already know I don't like him.

 

Nah, royalty holders get to kick back with some lemonade and wait for checks to arrive in the mail. Business owners actually have to work, put in time, assume risks, handle recalls of royaltied products (oy!). I don't like J either. But I think a fair (and funny) question would be to ask him exactly what does he want -- $X per job, a percent (where you have to disclose to him all the financials of the job), a homemade apple pie, ... for the next 10 years, even after he dies $ goes to his estate, ... what?

[Guest]

Haven't read all the replies, but James is a bit full of himself.

If James recommends You to Sam, and Sam loves the work, then recommends you to Steve, who hires you, then it is Sam who has done the recommending, and he did so based on the work you did for him. Therefore, James isn't entitled to anything. Period.

 

ETA: and yes, sounds like extortion. I don't think he's much of a "friend" if he's making threats and harrasing you. sounds to me like business is bad for him, and he wants you to keep him afloat

 

This is a good way to think about it. I might mention it this way to BIL.

 

Btw, J is the very definition of entitlement. If you look up the word "entitlement" in the dictionary, there will be an accompanying illustration of him.

 

:lol::lol:

 

It sounds more like he wants partial ownership of Quill's business to me. :glare:

 

I don't know James, but I already know I don't like him.

 

Honestly, this is just what I said to BIL. I said, "Sounds like we might as well write James in as an owner on the Articles!"

 

Thank you folks, for sympathizing with me. I thought maybe I was missing something. DH is of the same mind as I am. BIL kept saying, "I knew you two would not see it this way..." I feel badly about it. I hate it when everyone is not all getting along fine.

[kitten18]

DH is a general contractor.

 

James is out of his mind.

[Harriet Vane]

ALL small businesses work by word of mouth referrals. I have never heard of giving someone a cut of your business just because you work together on some jobs. "James" is out of line.

[fraidycat]

You are not wrong. James is out of his mind. Tell BIL you already have an advertising budget and it's all used up. :)

[Kathryn]

I agree with everyone else. He's way out of line. Your BIL is crazy if he doesn't see that. I like what the pp said about if he's wanting to be hired as an ad/marketing agency, then it's no longer a reciprocal agreement and he needs to deliver.

[Donna]

I agree with you. If a referral did not come directly from that person, then I fail to see why you should owe anyone any money at all.

 

Generally, I've seen business things work out like this with no cash changing hands. For instance, I refer people to you if needed, while you refer people to me if needed. just as a goodwill gesture. it's one of those "what goes around comes around type of things"

 

This other guy sounds like a snake.

 

:iagree:

[melmichigan]

ALL small businesses work by word of mouth referrals. I have never heard of giving someone a cut of your business just because you work together on some jobs. "James" is out of line.

 

:iagree: I'm amazed your giving him money in the first place, let alone considering giving him more.

[ChristineW]

What would happen if James stopped referring clients to you? What if the previously referred clients chose someone else James recommended for their next job? Would your business suffer any or do you have a sufficient client base of your own? James request seems unfair to me, but on the other hand, he has no obligation to promote your business. If he's giving you 10 referrals and only getting 1 from you, he might well feel that he's being used. He isn't handling it right, but I'd think about what would happen if his referral stream dried up before I told him to jump in a lake.

 

Referrals are dicey. Dh works in a referral based industry. He keeps his referral sources happy with providing them work too but its never explicit. More like "X helped me with a similar problem and did fantastic work; I'm sure if you mention my name, he'll take great care of you." In some cases, its "this is the guy we usually use in this situation. Do you want me to set up a meeting?" Mutual benefit but no direct exchange of $$$.

 

Christine

[labst60]

I personally think it is unethical for referral $$ to switch hands without the customer being aware it is a paid referral. Does he disclose that he is being paid for the referral?

[Catwoman]

I personally think it is unethical for referral $$ to switch hands without the customer being aware it is a paid referral. Does he disclose that he is being paid for the referral?

 

:iagree:

 

We refer other professionals all the time, and they refer business to our firm, as well, and no money ever changes hands. It would be unethical.

 

Will BIL be getting a cut of the money you pay James? I hate to ask that, but he seems awfully adamant that James be paid, when all common sense dictates that James is 100% out of line with his demands.

 

For crying out loud, is he dating the guy or something? :tongue_smilie: Because his attitude makes no sense to me at all. I think your BIL has lost track of where his loyalty needs to be. (HINT: It's not with James! :glare:)

[Bluegoat]

Well, James is wrong. I think I might tell James that I will give him a commission for every job if he will do the same. Maybe if you put it that way he'll get the point.

 

On the other hand, if I knew my interior designer was getting a commission for recommending a particular builder, I wouldn't use that builder or the designer.

[PiCO]

I think James is an ass.

 

Do you pay other people a referral commission? If not, I would stop paying James at all.

 

I have been asked to get into a referral kick-back arrangement with businesses similar to mine. I have declined, because I want the freedom to recommend businesses I think are beneficial to the person asking for a recommendation, and not feel pressured to make a recommendation that's not quite right to a customer.

 

I would look askance at a recommendation that someone was financially benefiting from. (I would assume the person was only making the recommendation to get the pay-off.)

 

I do give my customers a financial reward for referring a friend, but it's a small thank you- not a commission.

[Guest]

What would happen if James stopped referring clients to you? What if the previously referred clients chose someone else James recommended for their next job? Would your business suffer any or do you have a sufficient client base of your own? James request seems unfair to me, but on the other hand, he has no obligation to promote your business. If he's giving you 10 referrals and only getting 1 from you, he might well feel that he's being used. He isn't handling it right, but I'd think about what would happen if his referral stream dried up before I told him to jump in a lake.

Christine

 

If he simply stopped referring, it could certainly make a difference. We have worked many jobs that he had a role in. OTOH, we do a nice business and have often been referred through a previous customer. BIL does not want either the friendship or business to suffer by telling James to go suck eggs. It is true he has no obligation to promote our business, but business for us often does mean business for him, so it's smart for him to refer us unless he has another builder he likes better or something like that. He does have a stake in it if he sends business our way; more than likely, he will get work as well. We routinely recommend him, but we don't have an exclusivity contract with him; if a homeowner wanted to use somebody else for the service he provides, they could.

 

I personally think it is unethical for referral $$ to switch hands without the customer being aware it is a paid referral. Does he disclose that he is being paid for the referral?

 

It's not exactly like that. He gets paid for work and we get paid for work, but since we're in sympatico businesses, we each benefit with more paid work if we refer to each other. The customer is aware because James is hired for his part in the job. Err...I know it's getting a little confusing because I'm not revealing the true details, but I'm hoping people can just make the correct leap in their own heads. It is normal for a person in his position to be paid commission for work he is doing with us when we're building a home. That part is totally normal and I have no issue with it. Where his request is getting weird to me is that he wants a commission for the tangentially or even totally unrelated work that comes our way, even if he does no actual legwork for that job. He feels that if he worked on a job with us for Bob Smith and then Bob Smith tells his sister-in-law to use Quill's Family Builders next year, that he(James) should still get a commission on the sister-in-law of Bob Smith, even if that sister-in-law does not work with James at all.

[Tap]

I'm the director of marketing at my work (IMO a glorified Office Manager ;) ) and what he is suggesting sounds like he is basically saying that:

 

1) He is responsible for advertising your business to others and that

2) It is because of him that your business is heard about through the community

3) He should be compensated for the promotion of your business

 

Well, if that's the case and he is wanting you to basically pay him for marketing your business then that comes with responsibilities, too. :D Any time I sign a marketing contract there is always a guaranteed number of sales and profit that much come from those companies that we do our advertising with. If he's wanting to advertise for you then he should guarantee you a certain number of viable leads. ;)

In addition, I do not advertise or promote those that I advertise with. So, if you are changing your relationship to one that you are paying him for advertising I would be quick to let him know that since it's no longer a back-scratching relationship and now a paid advertising situation your company will no longer be doing any advertising or promoting for him. :D

 

:iagree: He is wanting to be paid as an advertiser, not by commission. This should come with a contract that has a pre-set termination date with a 3-6mth limit and require resigning.

[Amy in NH]

Um. No. That is crazy. Friendly promotion is one thing, but you did not hire him to advertise for you. He's lucky you were nice enough to give him a commission at all.

 

Does he pay you commission when you send work his way?

[QuirkyKapers]

What would happen if James stopped referring clients to you? What if the previously referred clients chose someone else James recommended for their next job? Would your business suffer any or do you have a sufficient client base of your own?

 

 

How about flipping it around, if you stop referring to him, will his business suffer? I think he is unreasonable. He gets paid for the part of the job he does, just like you get paid for your part that you do. If only he is hired somewhere to do his part and you are not, than you don't make commission.

 

Sounds like he wants more money but doesn't want to invest the time to do more marketing on his own to make more money. Easy way out.

[bookfiend]

If he simply stopped referring, it could certainly make a difference. We have worked many jobs that he had a role in. OTOH, we do a nice business and have often been referred through a previous customer. BIL does not want either the friendship or business to suffer by telling James to go suck eggs. It is true he has no obligation to promote our business, but business for us often does mean business for him, so it's smart for him to refer us unless he has another builder he likes better or something like that. He does have a stake in it if he sends business our way; more than likely, he will get work as well. We routinely recommend him, but we don't have an exclusivity contract with him; if a homeowner wanted to use somebody else for the service he provides, they could.

 

 

 

It's not exactly like that. He gets paid for work and we get paid for work, but since we're in sympatico businesses, we each benefit with more paid work if we refer to each other. The customer is aware because James is hired for his part in the job. Err...I know it's getting a little confusing because I'm not revealing the true details, but I'm hoping people can just make the correct leap in their own heads. It is normal for a person in his position to be paid commission for work he is doing with us when we're building a home. That part is totally normal and I have no issue with it. Where his request is getting weird to me is that he wants a commission for the tangentially or even totally unrelated work that comes our way, even if he does no actual legwork for that job. He feels that if he worked on a job with us for Bob Smith and then Bob Smith tells his sister-in-law to use Quill's Family Builders next year, that he(James) should still get a commission on the sister-in-law of Bob Smith, even if that sister-in-law does not work with James at all.

 

So basically he is suggesting you should agree to the Amway model of building referrals? Silly. Someone needs to explain that referrals are not a pyramid scheme. Just you like are paid for the exact work you do. He is being compensated for the exact customer he brings you. In the above example, he would actually be stealing the sister-in-law's commission.

[Marylou]

So . . . your BIL doesn't believe you built your building business :tongue_smilie:

 

Sorry, couldn't resist.

 

I think you are right to be upset.

[Plink]

I would absolutely, positively, and without question, refuse to put anything in writing with that guy. It sounds like he would be a huge lawsuit just waiting to happen.

 

Yeah, be very careful to have a lawyer involved if you decide to put it in writing. You could easily make things worse.

 

It is very tricky to be in business, nothing is as clear-cut as it seems at first glance.

 

We own a business and were asked to allow our services to be promoted at one of the giant national warehouse chains. They would have offered us a great system for promoting our products/services and would have given us access to a group of people we hadn't yet reached. The warehouse had an enormous contract that we took forever to read through. In the fine print, we found out that they demanded that ANY customer with a membership to their warehouse would be considered a referral and therefore if they bought from us the warehouse deserved a large cut of our profits (regardless of whether the customer had been buying from us for years, whether they spoke to anyone at the warehouse about our business, or whether they recently moved from a different area and had never even stepped into the local warehouse). Not only that, but they wanted to have their cut HAND-DELIVERED the same week that the order was placed. Since many of our products are custom, that would mean that we'd have to pay the warehouse before we even received payment from the customer. Sketchy stuff.

 

We decided we didn't need their referrals. Our business has grown well, and none of us regret the decision. Not even a little bit.

 

Not sure if my story applies to your situation, but I just wanted to let you know that your guy isn't the only one out there demanding an unrealistic referral cut, and it isn't necessary to bow to their demands.