[Jewelry making - Article 00418] - Re: [Orchid] Wholesale order dilemma

[R . E . Rourke]

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    HOLD ON RODNEY! Their proposal is not reasonable whatsoever. read
    between the lines. they are asking for a price break on your labour,
    they want to give you materials that you have no idea from whence
    they came, they also want to supply the stones, again- you have no
    idea of their origins which can be among other things, as far as the
    FTC is concerned and the IRS, illegal. Don't make a move with these
    people before 

    A) getting some contracts ready for them to sign, particularly a
    standard NON-COMPETITION form., a testament and copies of their
    purchase orders for the materials they are handing over to you, an
    agreement that they will not violate any trademark and/or copyright
    s you hold exclusively, that you alone will own the rights to
    reproduce the design and any subtle modifications thereof, etc. (the
    list is quite long) 

    B). there are about six reasons I can see right off the bat from
    their email and web site's statement why I would gracefully bow out
    unless they are willing to give you about - and I am not kidding-
    $225, 000. 00 up front and a clear contract that spells out that the
    design is trademarked, copyrighted and is not for reproduction
    (unless you are the contractor that does the reproducing!) and future
    orders are to be placed solely with you for that design and including
    minor modifications thereof. that would be a fair wholesaling
    contract binder and represents to you their serious intention to
    retain you as a manufacturing vendor of that specific design to be
    produced until x amount of the retainer is used as proved through the
    labour costs and until that period is expired *OR * At which time YOU
    alone reserve the right to renew the agreement and at which time they
    are bound ( by a bond or escrow account - a bond is better!) to pay
    you x amount for a period of time that you state that you are willing
    to re release that design in a limited edition of x number of
    pieces.. I could go into great detail on the stipulations you must
    spell out to achieve absolute clarity and to consider all the
    legalities of this but Orchid is not the place, nor is that type of
    consulting quick or free. 

    Secondly, DO NOT LET THEM PROVIDE THE MATERIALS. you will not only
    get better prices when buying in the quantities you need from the
    supplier(s) you have established accounts with, but you can control
    the materials from their arriving at your studio until packaged for
    transportation via MJSA's Fed EX system or the equivalent. I would
    find it very suspect if someone, were casually going to hand over
    about 15 ounces of gold and 50 plus IF or at least VVS diamonds. As
    for buying the diamonds, you have many options there, and because of
    the size of the parcel you need, you will be in a position to
    negotiate with your favourite vendors for the quality your new found
    "associates" want to specify for use, as they are essentially
    commissioning you to produce x, which is in effect copying your
    design, and perhaps modifying the quality to meet the price point
    they want to sell it at- which should be, in my opinion the only
    element you are willing to compromise on regarding your design
    quality and modifications to accommodate them.. That is- BEYOND the
    price you are charging them for copies of your design/ring- and
    whether or not you are willing to compromise the quality of the
    stones to fit their pricing. The entire wholesale/retail venture
    should be moot- ( if you are at all willing to compromise your
    standards to make a deal that sounds very suspect to me in the first
    place !). 

    You are the goldsmith and the designer, and your terms are
    X-:(hopefully) that you will supply 50 rings- 10 each of five sizes
    (womens 6, 7, 8, men's 9, &10) at a cost to them of about (just for
    approximation's sake, and this is a lowball estimation at best:-)
    1,850. 00 each for women's sizes and 2, 150.00 each for men's sizes.
    they are then free to resell the rings at any price they wish and to
    whomever, wherever they wish, as long as they do not infringe on the
    non-compete and other design rights agreements, do not send your
    design off to be modified sightly and reproduces then, legally (there
    are a lot of contract negotiations you will have to consider in
    dealing with these people because you are not a wholesaler). 

    Your proverbial bread and butter is that 2.0 or 2.5 mark-up, in
    letting that go, you loose not only the creative control you have
    over your product, but leave your design open to "reinterpretation".
    I would seriously rethink getting involved with these people. It is
    not how you do business in the first place, and like I mentioned,
    unless they are willing to put you on retainer, and in exchange they
    have you waiting to fill reorders in specific sizes of the same
    quality as you first supplied, I think you are in for a battle of
    international copyright and trade agreements not to mention potential
    losses if they resell your design to a third party in China, for
    instance, in which case you have very little recourse as the trade
    laws are in the favor of the lets say Chinese producers that will
    have ultimately - 

    a receipt in their hands, from the couple you met at the show, that
    sold it to them. therefor the non-competition clause is with the
    couple not the fabricators in China. 

    They already have the "square sliding diamond ring" concept in their
    mind. Trademark and copyright it as fast as your counsel can do it,
    and run away- If you aren't looking to set a long or short term goal
    to enter into wholesaling even a few designs. This is not the deal to
    break ground with, given what you have gleaned already from their
    site and I from their email.. 

    Feel free to contact me offlist if my advise is what you'd like or
    some exemplary non-competition and design rights management type
    forms to have in your attache' when you visit their offices ( which,
    if you are even remotely considering going ahead with dealing with
    this entire new division of your business after reading what I have
    to say and no doubt others will as well- I would definitely at least
    set up a meeting, or drop by unannounced to check it out, then decide
    after seeing what is there, whether or not you want to press on with
    the entire thing). good luck and trust your instincts and add on at
    least 20 hours to any projections of time you have in your head
    already. and I'm betting in that time vision you have not allowed for
    initial consultations, and how much time you are willing to spend
    re-negotiating the fine tuning of any contracts, design and
    production details, and just the time it takes to establish a
    working relationship in general, as a few faxes may do it if you are
    used to your designs being available for reproduction, however since
    you are asking for advise here, I'm betting this is not standard and
    you haven't begun to consider all the things that it takes to bring
    what sounds like it should be a direct process ( they pay you x and
    you deliver x- they play fair and don't reproduce your designs
    illicitly and your name is used as the designer /artisan goldsmith
    and ultimately that they are essentially asking to pay you for
    fabricating your design and then they want to take your design to
    market).. 

    Bottom line: do not bend on your position. Selling to retailers.
    that is what you do, that is what you want to do and entering into
    any new contracted agreement and business structure is not a breezy
    thing to be treated lightly when your design is on the line. They
    already have a name for it.. that should tell you a bit about them,
    they aren't referring to it as" "your design" that we would like to
    discuss buying the rights to or we would like to market your work and
    will help finance it's production ", or anything remotely like that.
    They want to take it, reproduce it at as little cost to them as is
    possible and produce it overseas with wholesalers with whom they have
    already established a relationship. run away, free your head of it
    and protect your design as it is! 

R. E. R.
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