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How to deal with a National that wants to change terms mid contract?

Discussion in 'Commercial Snow Removal' started by buckwheat_la, Apr 3, 2013.

  1. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    I am looking for advice on a situation, please everyone try be constructive. I have worked for this National Managment company for many years, and for the most part they have alway been profitable. We do a number of banks and other buisnesses for them and they usually grind me down a bit on price, but they have been loyal to us and usually give us all their work in the local market.

    In December they asked us to quote out all the local (within 50km / 30miles) branches of a bank. Now due to the specs they required a zero tollerance for these banks for both the parking lot and walk ways, and when I say zero tollerance I mean the bank phoned on a 1/2 inch of snow that fell 1 hour before opening and complained it hadn't been done. Needless to say I recognized right away that this contract is going to be a headache, and billed it accordingly. Feb we had a very light month and we made all right money on it, but March we had 5-6 light to medium snow falls (everything from 1/2 a inch to 10 inches) and we made a fair bit of money on the sites. I even phoned them half way through the month to let them know where their account was at and that I was a bit concerned about the money this account was accuring and wondering if they would want to revise their triggers and was told to keep it the same way.

    So the end of the month we invoiced them and today we got a message from them saying that they feel the invoice is too high and they want to see a reduction in the invoice or else they are cutting off all our contracts for all the jobs we do for them and they won't use us anymore. Now after a conversation I had with my rep there they informed me that they took my per time price and used it as a average of 4 times a month incured and use that as a figure for their contract with the bank. Basically they screwed up, and want me to eat the cost.

    Now the reality is that I do a lot of work with this company, with numerous buisnesses, and I will lose all of that if I don't agree to do what they want to do. The other reality is that I could reduce the amount and still make profit on the jobs, just not the profit I would normally expect. The last bit (and maybe the most important part) is they have shown themselves to be dishonorable in this situation, how do I trust them going ahead? I have already told them that if I do this I expect a 2 year contract guranteed for all the work I do for them, but how do I trust them to honor that agreement if they are willing to throw this one to the wind?
    Last edited: Apr 3, 2013
  2. Sawboy

    Sawboy PlowSite.com Addict
    Messages: 1,562

    Stick to your guns. Take what you honestly earned and let the chips fall where they may. The writing is on the wall.
  3. 94gt331

    94gt331 Senior Member
    from usa
    Messages: 293

    That sucks. The reason I won't ever deal with a national.
  4. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Well if you take a bite now,keep eating,that's what going to happen.Go through your contract and find the section about cancelling a contract and read it,that is what's going to happen,
  5. Mr.Markus

    Mr.Markus PlowSite Fanatic
    Messages: 5,107

    I'm guessing they wrote your contract...you followed it, and now they are having trouble justifying the price to their customer. I do a few banks as a sub of another company, the documentation they require exceeds the work of servicing the lots, I make great money per hour but it's a pitance when you weigh my exposure to liability. You take a great risk signing this type of work, the least they can do is thank you and pay your bill. If they have a problem with it they need to address it on renewal, not "After" you completed your end of the deal.
    Also, in the future, I would communicate with them through email not by phone, always have a record.
    Last edited: Apr 3, 2013
  6. xtreem3d

    xtreem3d PlowSite.com Addict
    Messages: 1,547

    I would worry a 2 year deal wouldn't be worth the paper it's written on . This is in no way a bash at you but it sounds like you have alot of eggs in one basket with them..I have been in that spot too..learned to get more diversified if possible but I realize you don't just go out and pick up work easily...hope that was sort of constructive,
    Good Luck,
  7. Herm Witte

    Herm Witte Senior Member
    Messages: 546

    Obviously this is white collar blackmail. You, not the Plowsite community, have to weigh the pros and cons of your relationship with the national provider you work for and the answer the question; is this relationship worth keeping or do I move forward without them? I encourage you to employ the services of a lawyer for counsel as well. Unfortunately many in our industry do not hold their clients accountable to their contractural obligations. My fear for you is once you cave.....
  8. 1olddogtwo

    1olddogtwo PlowSite Fanatic
    Messages: 11,394

    Stick to your guns.

    Once they break ya, they own ya.
  9. Ramairfreak98ss

    Ramairfreak98ss PlowSite.com Addict
    Messages: 1,885

    I've dealt with a ton of them... besides all the bad about USM ive posted in the past, none have ever said they feel the bill is too high. You either did the work or you didnt. If you serviced, bill for it and get paid.
  10. quigleysiding

    quigleysiding PlowSite.com Addict
    Messages: 1,091

    Seeing so they cant count. Maybe now would be a good time to try and switch them over to seasonal pricing.
  11. Italiano67

    Italiano67 Senior Member
    Messages: 638

    They figured 4 times a month? They are nuts. If you bid a seasonal wrong yourself guess who would be eating it. Tell them tough luck and next time bid smarter. If you have good work for them before they will be back.
  12. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,990

    They signed two contracts, one with you (a vendor) and the second with their customers.

    They are two separate contracts and while on the same piece of dirt not at all related.

    They owe you and cannot bill their customer more than they stated. They need to pay for their mistake.

    Do you think they would pay you more than the contracted amount if you had made the mistake?:nono:

    Notice they didn't go to their customer. Why? Because they would laugh at them all the way out the door. Then stand at the window and laugh while they walked to their cars.
  13. allagashpm

    allagashpm Senior Member
    Messages: 700

    I think the fact that its a national shouldn't impact your decision. You may get a lot of business from them but they will do it again next year. They will be making money while you upheld your side and lost money. If it was a normal account and you called them and warned them, wouldn't you still bill them?
  14. cat320

    cat320 2000 Club Member
    Messages: 2,222

    I agree stick to your guns . If you didn't call them to explain how much things where going to be then you could say they had sticker shock looking at the invoice you gave them based on what they quoted. but since you gave them the opertunity to rectify any problems with the heads up call then they should have no issues with you and eat there loss from not calculating it right like everyone has to do when giving a lump sum quote unless terms are outlined in the quote. Trust to that is not there and gone if they listend to the words you told them and said go on anyways. and who is to say they will give you anymore work after . they might thing you will try to make it up on the next one or not show up leaving them hanging for making you work hard and them make the profit for sitting behind a desk.
  15. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    Thanks for all the advice guys. I am very worried that as someone put it "once they break me, they own me" now the reality is that I have done work for this company for a long time and this is the first time I have had a problem like this. BUT it doesn't negate the fact that they should have never put me in this position to begin with. I am trying to keep emotion out of it, but they are asking me to pay for their mistake, and if the role was reversed they would let me take the loss.
  16. goel

    goel PlowSite.com Addict
    Messages: 1,079

    This is a today's dollar vs tomorrows dollar question. Its one you should not have to deal with, but now its in your hands.

    1) Do nothing.

    That means today's dollar is worth X. Its the fixed amount you have already billed.

    That also means that tomorrows dollar is worth Y, which in this case they have said will be ZERO.

    X+Y= already invoiced amount

    2) Do as they ask.

    That means today's dollar is worth X - percent. You have said that you can do it, and still make money, but just not the margins you regularly make.

    That means that tomorrows dollar is worth F, which in this case could again be a big old ZERO or it could be 5 years of work.

    (X -%)+F= ?
    (today's dollar - percent) + Tomorrows dollar (Future) = The Big Question

    Now, you also mention TRUST. Can you trust them, nope - you never could. Its all about the almighty dollar and everyone wants that dollar in there pocket, not yours. Just because they are a national does not matter, it could be each and every one of your customers, its just exposure to nationals are usually on a larger dollar scale (not a larger margin scale).

    The 2 year contract you are insisting on from them means nothing, it will be a piece of paper just like your current contract that they will break any time they feel like - so I would not put much into it.

    So again, its today's dollar VS future dollar (which is unknown). Only you can actually decide whats best for your business - knowing full well that you could reduce your price and still get absolutely Zero work in the future. But, then again - you could work with them for the next decade also.

    Good luck with your decision and let us know how it works out.
  17. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    This sums it up quite nicely, good job. I agree that the paper it is written on is esentially worthless, but the acknowledgement from their management that they screwed up and that they will make certain changes does show a commitment by them to continue the working relationship and more importantly to be more careful in the future. Also if they do agree to gurantee the next year summer and winter work and fire us next month, they are opening up the possibility to be sued for all the lost work for this contract. Of course the chances of me being awarded all that in court are nil, but they have to know they are opening up themselves to higher risk too. The email has been sent, and I hope to have a response by the end of the day.

    Great advice from everyone, helps to keep things in perspective when you have a outside view.
  18. DodgeBlizzard

    DodgeBlizzard Senior Member
    Messages: 526

    The National Company is in this for the money, yet you're doing ALL THE WORK and taking ALL THE RISK. You performed what was more then likely the contract THEY wrote up. Mistake number one was dropping your price from the start. I haven't seen your prices, but I have received enough bid packets to get a good laugh from their numbers. Not one of them has even stepped foot on the property. They go from a set of blueprints and google earth. Now that you've done the work, they don't like the bill and they want to tell YOU what they want to pay you? And you're considering it because they threaten you to drop all your accounts? Forget the loyalty word. You're only a money making tool in their toolbox. You will be replaced in a heartbeat. I see new guys every year doing these properties that I know are taken care of by Nationals. Actually I see new guys change hands mid way through the season. I see your point of not wanting to lose all the other income. But I would also remember back to all those cold Winter days and nights of working. All those fuel bills. All those truck payments. This is your income. I would never let anybody dictate a pay deduction for my business. Are we talking a couple hundred bucks? Are we talking thousands? Maybe beat them at their own game. Work with them and then make up for it down the road........if you know what I mean. Sometimes you have to think the way they think. But how are you going to feel if you give them a price reduction and then they say SEE YA ?
  19. BC Handyman

    BC Handyman PlowSite.com Addict
    Messages: 1,838

    I would say you got the right idea Dodgeblizzerd.
    buchwheat, I'm going to call you tonight after work, to give you my 2 cents. I still got your number in messages.
  20. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    At least give him a double loonies worth!