Become an independent sales agent

What is a sales representative?

The sales representative is a representative permanently loaded and independentto negotiate and possibly conclude contracts for the sale, purchase, rental or provision of services, for and on behalf of a company principal.

It offers this company (the principal) sa commercial competence and sound market experience, whether in industry, real estate, sports, construction, information technology, the medical sector, etc. Its principal may be a producer, an industrialist, a trader or another commercial agent.

In other words, the commercial agent is a commercial intermediary dealing with customers, in the name and on behalf of a company whose products it distributes. Its primary function is to bring new customers and retain those already out of the market.

A commercial agent may practice under one of the following legal statuses:

• Sole trader (including under the micro-entrepreneur). The commercial agent shall act as a natural person.
• Business (EURL or SASU). The commercial agent shall act as a legal person.

In either case, he may exercise alone or with staff. It may also enter into commercial agent contracts with other commercial agents. In this case, the commercial agent is the principal and the commercial sub-agents are its agents.

The profession of commercial agent is economically accessible. The commercial agent does not require substantial funds to operate as long as he does not own the goods (he does not hold any stock) and does not need to enter into a lease to occupy commercial premises.

What is the difference between the sales agent and the business transferor?

Unlike a commercial agent who negotiates and enters into commercial transactions in the name and on behalf of its principal, the business transferor connects only the company and the customer. It shall not intervene to contract on behalf of any of the parties.

The business transferor shall act in his own name and on his own behalf. It does not represent the company for which it is carrying out a prospecting mission.

His intervention is punctual and ceases as soon as the parties have been connected, while the mission of the commercial agent is permanent.

The major difference lies in the fact that, unlike the commercial agent, the not entitled to termination indemnity (equal to 2 or 3 years commission).

Independence of the commercial agent

The sales representative uses the name, logo or trademark the company entrusting it with the sale of its products or services.

However, the commercial agent shall independent. He manage freely the organization of his work and alone determines its level of activity and its financial objectives without the requesting company being able to give it directives.

For example, the sales representative may employ sub-agents which he pays. These are other commercial agents with whom he enters into an agency contract. In this case, the commercial agent is the principal and the sub-agents are his agents.

Thus, the commercial agent is not the holder of an employment contract in respect of this activity and exercises without subordinate relationship with the mandating company. The sales representative has a commercial agency contract specifying, in particular, his status as self-employed person, the nature of his services, the conditions for exercising them and the arrangements for remuneration.

Drafting a contract written is not obligatory. On the other hand, in the absence of a written document, it may be appropriate to lay down, in a simple document, the basis for the organization of the commercial agency contract. This document will be careful to mention the purpose of the mandate (products or services for sale, target clientele) and the agent's remuneration at a minimum.

Reciprocal duty of loyalty

The sales agent and the requesting company have a reciprocal duty of loyalty :

• The principal must take all practical measures to to enable the commercial agent to exercise his or her mandate normally.

For example, he must make available to the agent the documents necessary for the activity (purchase orders, product data sheets) as well as the correspondence exchanged with the customer, the invoices and the amount of commissions. The company must also notify the customer of the price increase, delivery delays and acceptance of a quote within a reasonable time.

Likewise, it is for the principal to provide the agent with all the accounting documents necessary for the calculation of the commissions due to him.

• Thesales agent shall carry out its mandate as a good professional.

It must preserve the image of the requesting company by presenting the products or services marketed in accordance with the technical guides provided by the company. The commercial agent must also inform his principal of the market outlook.

In addition, the sales representative must obtain the agreement of its principal to represent another competing company of the latter.

How is the sales representative paid?

The remuneration of the commercial agent shall be freely fixed by the parties in the agency contract.

In most cases, the commercial agent is entitled to a commission whenever a commercial transaction is concluded through its intervention. It also has a right to commission when one of its customers subsequently concludes a similar contract directly with the requesting company (unless the agency contract opposes it).

The commission amount is usually calculated as a percentage of the realized turnover by the agent. It can also be a lump sum.

The sales representative forfeits commission if it is established that the contract between the customer and the requesting company will not be performed (for example, in the field of sale, when it is established that the buyer will not pay the price). In this case, it may be forced to to reimburse commissions which he would have already received.

Nevertheless, the agent retains its right to commission if the non-performance of the contract is due to circumstances attributable to the requesting company (e.g. late delivery).

What is the sales agent tax?

The tax regime of a commercial agent varies depending on whether he issole trader (including micro-entrepreneurs) or business (SASU or EURL).

Period of notice in the event of early termination

Where one of the parties takes the initiative to terminate the commercial agent contract early (before the termination of the contract), a notice period must be respected. This period varies according to the duration of the contract in question:

• 1 month notice in the event of a breach of contract during its first year
• 2 months notice in the event of termination of the contract during its second year
• 3 months notice in the event of termination during the third and subsequent years of the contract.

If the fixed-term contract has been converted into a contract of indefinite duration, the period of notice shall take account of the preceding fixed-term period.

The commercial agent and the requesting company may also agree in the contract on a longer notice period.

Termination Compensation

In the event of termination of his contract with the principal, the commercial agent shall be entitled to a termination indemnity in compensation for the damage suffered (loss of income).

This compensatory allowance shall be paid within following situations :

• The commercial agent contract is completed and is not renewed.
• Sales agent contract has been broken before it ends by the principal (unless the staff member is guilty of serious misconduct).
• In case of death of the official (the allowance shall be paid to rights-holders).
• Where the termination of the contract is due to age, disability or illness as a result of which the pursuit of his activity can no longer be reasonably required.

The allowance shall be calculated by reference to gross commissions received by the sales representative in recent years. It is usually equal to 2 or 3 years of commission.

In the event of a dispute, the judge may assess the amount of the compensation taking into account multiple items, such as:

• The loss of commissions to which the officer could reasonably be entitled in the pursuit of the warrant
• Deprivation of the possibility of passing on his mandate to a successor for consideration (this right has an economic value)
• The loss or reduction of the profit which he could derive from the investments made for the performance of this contract
• Expenditure resulting from the termination of the contract, including redundancy payments for staff who have become redundant (if the staff member employed employees or commercial sub-staff).

However, the termination indemnity is not due to the agent in the following cases:

• Termination of the contract is caused by the serious misconduct on the part of the commercial agent (e.g. physical and verbal aggression of a customer, refusal to comply with sales methods, failures in sending orders many times).
• Termination of the contract shall result from the agent's initiative. The staff member shall retain his right to compensation if the cessation is due to age, disability or illness or to circumstances attributable to the principal (e.g. failure to observe duty of loyalty).
• According to an agreement with the principal, the agent shall assign his commercial agent contract to a third party. The commercial agent may present to the principal a successor to whom he assigns his rights and obligations. If the principal accepts the assignment, he shall be exempt from payment of the termination indemnity.