Franchise States Part Deux: Breaking up is REALLY Hard to Do

In the last couple of weeks, I have had a number of conversations with friends in the industry about dissolving relationships with distributors in franchise states. As I have written about before, franchise laws can be extremely tricky. I have gone through a few instances of making changes in those states so here are a few quick tips I have to offer:

1. Although there are laws in many franchise states that allow wineries some recourse, and those laws may seem cut and dried to you, the state heavily favors the side of the distributor and nearly all lawsuits show this as precedence. Do you see provisions that state that if a distributor is a late or slow/no pay, they don’t adequately market wine, or they don’t buy wine at all, then that qualifies as “just cause” for a release? Sorry. It’s hard to win on this one.

2.  If you can prove you have “just cause,” and your existing distributor agrees to a release, it’s common practice in many franchise states that in order to obtain a letter of release, you must buy out your franchise agreement. This means that the winery pays its old, under-performing distributor a year+ of gross or net profits. Even if the distributor still owes thousands of dollars!

3. How about waiting periods? In many franchise states, once a release letter is obtained, they still have 30, 60, 90+ days to sell their remaining product and the newly appointed distributor must sit on their hands and wait to sell your wines until that waiting period is up. Of course, the old distributor will offer a fire sale, which means that for months afterward, who will want to purchase them at regular wholesale prices? This can cause slow shipments, depletions and months of pain for a winery that has finally obtained a release, not to mention a frustrated and dejected newly appointed distributor sales force.

4. Have you considered lawsuits? Many distributors (particularly the big ones) in franchise states retain franchise attorneys to specifically go after wineries that have dropped them. Although you may eventually win the suit and be granted a release, consider that you may end up spending tens of thousands of dollars, and while the suit drags on, you will have months without your product being sold in that particular market. Also consider that your emails are NOT your personal property, so during a lawsuit, anything you have ever written to anyone in that franchise state becomes public record if it is included in the suit.

My biggest piece of advice: leaving distributors in franchise states is rarely easy and commonly very expensive. Do not consult other distributors in a franchise state for recommendations on what to do. Call up a qualified franchise attorney, spend the $2-5k it will likely cost to evaluate your position and possibly obtain a release letter, and do things the RIGHT WAY.

Breaking Up is Hard to Do

I can remember the first time I ever had to “fire” a distributor—I was given the directive by my boss, and for a week, I sat and stewed about how I would do it. I finally wrote myself a little script, and with some resolve got my nerve to pick up the phone to call—my stomach was in my throat, my heart was beating rapidly and my mouth was dry. As the phone rang, I silently recited what I would say. The person on the end of the line answered so good-naturedly—I felt awful for what I was about to do. We exchanged some pleasantries and I awkwardly blurted out, “The reason I called is because I have some bad news. Unfortunately, we have decided we’d like to take the winery in another direction and we have decided to move to another distributor.” Of course, this is when the conversation veered off script. The person on the other end of the line started throwing out numbers and percentages about how our business had grown, and how this was a complete and total shock. As they talked, I realized that they were probably right—that they HAD done what they thought was, at the very least, a decent job, and that the winery had never approached them about the fact that we were unhappy with their performance and given a chance to try to change it.

I mostly just included this picture because it came up when I did a google image search for “awkward phone conversation.”

Even though I’m not working right now, I see my friends at wineries around the country wrapping up their fall travels, and begin looking towards the New Year, while taking stock of the progress and challenges of the previous one. This is a time where people start forecasting for their year-end meetings, and in some cases, start making plans to change distributors. The worst conversation you can possibly have in the wine business is the one where you tell a distributor you are planning to leave, and they have no idea that you were unhappy. I had a friend tell me once that when she left a distributor, it felt like a breakup—they weren’t even on speaking terms anymore.

So before you decide to make a move, please learn from my mistakes and consider the following:

Have you told them exactly what you expect?

• No one can read minds—and even if it might be obvious to you, remember that distributors have hundreds or thousands of wines they represent so being pointedly honest and well prepared about what exactly it is that you expect is extremely important.

Have you asked them if they think your expectations are reasonable?

• The sales you want to achieve might seem like a no-brainer to you, but distributors know their business and their market better than you do. They are your partners and so it’s important to remember that you need to listen to their side of the story and take into account their honest assessment of what can reasonably be done.

Have you visited the market regularly or supported them in any way?

• If you haven’t been to their market, how can you even conceive of how much business they can do for you? San Francisco and Indianapolis have roughly the same population, but the markets are drastically different. Evaluating what one market might against one of a comparable size is like apples to oranges.

Do you have relationships with their Reps?

• They can often offer valuable feedback about how your wines are received, or if they take them out regularly, if at all.

Have you gone over pricing? Have you offered any programs? Samples?

• No one can sell your wine if no one knows what it tastes like.

Have you been consistent in your follow up?

• People have a lot on their plates these days. Gentle reminders (maybe once every month, not daily as I have heard from some brand managers) can be effective—spreadsheets with information on depletions and shipments against expectations have proved helpful for me.

If ultimately you decide you need to make a change, I offer the following suggestions for a smooth transition:

1. Make sure you are not breaking any franchise laws.
2. Make sure that before you tell them you are moving, you have paid them for all bill-backs and that they do not have any outstanding invoices.
3. You have a plan and the money to pay them for their existing inventory—will your new distributor buy it? Will you buy it back?
4. Make sure IT IS NOT A SURPRISE. One of the people I admire greatly is a guy who has left any number of distributors over the years, but he has been able to do it with class, grace and a sense of dignity—each of the companies he has left has not been surprised—they’ve been a part of the conversation, have been given ample chance to correct or improve business, and ultimately both parties came to the table mutually agreeing that while it was sad, the winery was not a fit for them any more. In all cases, they have remained friendly years down the road. I think that’s something we should all aspire to. 

Staying Healthy on the Road

One time, I was on a sales call and was pouring wine for a chef who also buys wine for his restaurant. I started to pour the first wine and looked down at his hands. His fingernails were absolutely filthy. I mean, brown under each nail and his hands looked even worse. This was during the middle of the day and he had just come in; no cooking of any type had been done yet, so it’s not like his hands were covered in squid ink or something. There was no excuse for it.  And then? He offered to put together a few bites for me and the rep while we tasted. I shrugged and said I wasn’t hungry, but the rep was clearly oblivious and was all about the free noshes. The chef came back with a couple of lovely meat and cheese boards, some bread and some other small bites, but guess what? His fingernails? Even WORSE. I was dying inside. I choked down some prosciutto and tried not to think about what gross things came off his hands and onto my meat.

And then, shortly after my run in with the chef, I happened to be at an event where a well-known winemaker was pouring. He is someone I’d consider fairly well dressed, and yet, again, his fingernails? He might as well have rubbed coal under each nail. Long fingernails too.  And no, he did not have the excuse of working harvest.

These run-ins with folks in the business made me extra-cautious going into the traveling season and so I armed myself with a few things that I wanted to share with you to stay healthy. (If you’ve met me, you probably noticed I already have a fairly healthy dislike of germs. I am that weirdo that opens bathroom stalls with paper towels, uses my sleeve to push revolving doors, and I wash my hands about 100 times a day side note: did you know that men’s bathrooms, although smellier and more disgusting looking are actually cleaner? I am totally that person who will gladly go into the gent’s if the ladies is full. Oh and never put your purse on the floor. Ever. It is a foul and disgusting soup of microbial activity and poop.)

My borderline Hughes-ish behavior.

So without further ado, here are my tips for staying healthy during busy travel season:

1: Sleep.

When I was first starting out in the wine business (ok, actually until about 3 years ago) I was a complete dumbass and lived by the adage, “I can sleep when I’m dead.” I stayed up late, either hanging out with people or working, and ended up feeling exhausted the next day. Plus, it literally ages you. No bueno.

2: Work out.

I hate hotel gyms—the equipment is always broken, they’re dirty (that germ thing again), and I feel like a f*cking caged hamster on a ghetto, mirrored wheel. So instead I book my hotels near yoga studios and I try to go to at least 3 classes a week. For me, it’s a cool way to see a different side to the community I am visiting, and a way to add depth and knowledge to my practice.  Plus it really helps me after sitting on planes and in other people’s cars for hours. And, it’s the only thing I have ever found where for 60-90 minutes, I’m unable to think about anything else except what I am doing in the moment. Pretty much every scientific study shows that exercising relieves stress and helps keep you from getting sick. So get off your ass and go burn some of that Raveneau and foie off your lovehandles.

Yeah, basically this is me at a hotel gym.

3: Don’t drink so much the night before that you can’t get your lazy ass out of bed to work out.

This one sums itself up. JE, this one is for you. You know what I’m talking about.

4: Lysine/amino acids

They are the building blocks of life. And since recent studies have shown that taking fish oil (something I’d done for years) basically does jack-sh*t, and taking a daily multi-vitamin not only does nothing statistically appreciable for you, but they might actually give you cancer, I thought I’d add another potentially worthless pill to my morning cocktail (because it seems to work).

5: Elderberry extract

Ok, now I sound like I am getting all Portlandia on you, but this sh*t works. I heard about it from my hippy-wine friend, Eric, and whenver I feel a tickle in my throat or a little run down, I start taking this for a few days and feel tons better. Sometimes hippies DO know best!

6: Use a neti-pot

Another Portlandia suggestion, but again, scientifically proven to do a lot of good for your sinuses. And Dr. Oz recommends it, so it must be legit, right? Check out this creepy looking video of how to do it. I swear to you, I do this every night before I go to bed (so sexy!) and I have not had a sinus infection in years (I used to get them constantly).

7: Wash your hands, creep!

80% of all illness gets transmitted through our hands. And ditch the anti-bacterial everything. That crap is horrible for you and the environment. Just use good old soap and water!

BONUS TIPS:

Don’t eat sugar. It’s killing you. Don’t believe me? Check this out.

Don’t watch tv or flip the main light switch in your hotel room. Those remotes: nasty germ havens covered in fecal bacteria and sperm. Vom!

Sitting is literally taking years off your life. Get off your butt and stand. Or lie down.

What do you do to stay healthy during OND?

Getting People to Listen

I spent last night, a Friday, by myself in North Dallas. I ate dinner alone at 5pm so I could make it to a movie (Pitch Perfect, which was hilarious and awesome, so at least I had that). Afterwards, I went to bed at 9pm. The amount of travel I have been doing lately has really worn me out, and I’m just now past my half-way point. By the time Thanksgiving rolls around, I will have been in the car with at least 30 people and will have interacted with hundreds of customers and sales reps. I know it’s not an excuse (to the 5 people who actually read this), but I’ve been busy and tired and haven’t kept up with my blog (I also try not to write about people I currently work with, so even though I have had some whoppers in the last couple months, I have refrained from telling them out of respect to my colleagues).

Pretty much sums up my Friday night. All I need now is a bunch of cats.

SIDE NOTE: I actually hate when people constantly talk about how busy they are—you ask someone, “How’s it going?” and the canned response seems always to be, “SO BUSY!” To quote a recent article in the NYT, “Busyness serves as a kind of existential reassurance, a hedge against emptiness; obviously your life cannot possibly be silly or trivial or meaningless if you are so busy, completely booked, in demand every hour of the day.” (and for the record, when someone asks me how I am, my canned answer is “Living the dream…” which I probably should change up as well since the response is sounding a little tired).

In any case, traveling to tons of markets, interacting with so many people but telling the same stories about the same wines can get stale—not just for me, but for my colleagues. One of my biggest challenges has been to make the wines and the stories that go along with them interesting and fresh.

About a year ago, I was on a ride-with, at an account showing wines for the small, family winery I represent. During the pitch, I talked about a few of the wines as they were poured, including, at least to my mind, a wine of ours that has one of the greatest wine label stories in the business. We got to the next wine and the buyer suddenly had to get up to go help a customer. As he left, the rep turned to me and said, “So what’s the story with the crazy label?” I laughed at the joke—the one thing I hear about this label is that once you hear the story, you can’t forget it. The rep stared back at me blankly and confusedly said, “No, really! I want to know! What’s the story?”

Wow this wine is delish! What’s the story again? My eyes are glassy?

I couldn’t believe it. I had just sat there for a good 10 minutes talking about the lineup, and to my knowledge, even though the rep had been present, had been tasting wine with me and the buyer, had not heard a single word I had said, including the incredible story of that label.

I felt utterly deflated. I mean, I am guilty of the glassy-eyed nod and stare (listening to people talk about sports, or my husband’s recounting of his myriad crossfit routines come to mind as two instances I pretty much immediately stop paying attention), but I thought I was telling a great story (guess I was wrong!), and I had wasted at least 10 minutes of breath only to be asked to repeat the entire thing. To the same person.

So, to make sure that same situation never happens again,  there are three things I try to do whenever I make a sales call or ride around with a sales rep:

1. Cut to the chase—a buyer is in his or her position because, ostensibly, they understand what kind of wine will work for their place of business. When you pour wine for them, don’t bother telling them how it tastes. Give them relevant information and keep your point simple and compelling. The number one complaint I hear from distributor sales reps is about the supplier who drags on forever with boring stories. Here’s a great article from the Harvard Business review about creating a compelling, simple message.
   
2. Listen and ask questions—When you truly listen to someone – when you offer them your undivided attention (you put down your phone, stop texting and looking at Facebook), ask them questions and show that you’re tracking what they’re saying,  shows that person respect and openness.  People who feel respected and listened to will automatically want to hear what you have to say.
3. Stop talking—if people are distracted, looking at their phone, or getting that glazed look in their eyes, stop talking and ask them a question. Clearly your communication isn’t landing and it’s time to try a new tack.

I do not recommend this technique for getting people to listen to you.

How do you make sure you’re heard?

On Ride-Withs (and “My First Ride-With”)

My first ride-with was when I was 21 years old. It was June (I had just graduated from college the previous month) and I was working with a distributor rep in Eastern Washington. Within 15 minutes of getting into the car, the rep broke down in tears and told me that she was going through a horrible divorce and bankruptcy filing because her ex turned out to be a con-man who was addicted to crack and had re-mortgaged all of their possessions to pay for his addiction. Unfortunately all of their possessions happened to be in her name so she was the one liable for all the debt. She had been thisclose to purchasing her dream house so that she could turn it into a bed and breakfast, and just like that, the dream had gone up in smoke. All day we visited restaurants that were basically knock-off Olive Gardens, or the occasional gas station with a wine license, and most stops, she would have to leave in the middle of the presentation because she was in tears. I was horrified and wondered silently what my dad would say if he knew that this was my new career.

My next ride-with hadn’t gone much better. This time, I met with a sales rep in a major metropolitan city, and she was over an hour late. She showed up disheveled and hung-over, clearly still wearing the previous night’s club dress, and as soon as we got in the car (littered with gum wrappers, diet pill bottles and cologne samples) she told me we had to go back to her place because she’d just returned from a one-night-stand and she needed to feed her cats. I was bewildered and didn’t know what to do. We drove to her apartment and she insisted I come in; it was a damp, dark basement apartment that smelled like stripper perfume and cat pee. She disappeared into the bathroom for almost an hour (after feeding her cats a half eaten can of tuna), and I just stood there feeling like I wanted to cry. We finally made it out of the apartment and headed to lunch, where she proceeded to tell me her “man troubles” and told me we didn’t need to visit any accounts because she’d “sell the sh*t out of “ my wine anyway. She insisted we walk over to the makeup counter at a nearby department store so she could do a makeover on me (in her “former life”, she was a makeup salesgirl), and somehow I ended the day having spent $40 on makeup I never used again, and visited no accounts.

Luckily after nearly 10 years, the ride-withs have gotten much better, but I did have quite a string of really bad experiences when I first started, and I look back now and wonder how I stuck with it.

So how did I even get into it in the first place?

How I look on ride-withs...

When I graduated from college, I had no clue what I wanted to do with my life. I double-majored in History and Visual Culture Studies (aka Art History) at a small liberal arts college in Walla Walla, and many of my fellow majors were either going directly into law school or were getting ready to begin the graduate school application process. I met with my advisers and they firmly suggested that I take a few years of work in the “real world” before considering graduate school; one of my advisers jokingly told me that I’d be better off going to night classes to learn web-design to start up porn websites because he had some former students who’d done it and were now multi-millionaires (he knew because they still kept in touch, and they had told him all about the endless prospects in the internet world of milk-and-honey). Obviously that was out of the question. I also couldn’t stomach the thought of law school and the expense (and lifestyle upon graduating). Somehow the wine world seemed way more appealing…

During college, I worked two jobs: one at a local wine bar/wine shop during the week, and on the weekends, I worked at a local tasting room. Somehow I managed to get a meeting with the national salesperson for that winery and was offered a job doing regional sales, starting as soon as I graduated. The problem was that I had zero training, zero knowledge of the wine business outside tasting room sales, and next-to-zero knowledge of wine outside Walla Walla.

I had a few cursory meetings with my new boss (who frankly was nearly as inexperienced as I was when it came to working on the supplier side), but she did tell me that I needed to start doing these things called “ride-withs.” These “ride-withs” were basically an entire day, where I, the winery rep, would ride along with a distributor sales rep and visit between 6-10 of their accounts, and at each stop, pour wine and make a sales presentation for the wine buyer. The function of the ride with was multi-purpose:

1) Sell wine—the hope would be that at each stop, the buyer would enjoy the wines enough to put them on his wine list or shelf, and maybe even get a wine by the glass or on display somewhere

2) Educate the sales rep—after 6-10 repetitions of the winery story and information about the wines, the sales rep would (hopefully) remember those details and be able to share them again when presenting my wines to other accounts in my absence

3) Build a relationship with the sales rep and the accounts—spending the day in someone’s car provides a great opportunity to get to know someone. Additionally they introduce you to their buyers, which can hopefully lead to direct communication between you, the supplier, and the buyer

4) Show the distributor that you support them in their efforts and that you are committed to a successful and fruitful sales relationship

Some things I quickly learned are very important on a ride with:

1) Have a sell sheet e.g. a list of the wines you are showing, along with prices and pertinent information on the winery/wines.

2) You should probably know about the wines you are selling. This seems like a no brainer but I’ve heard that a lot of supplier reps have no clue about the most basic details of their wine (vineyard locations, oak regime, alcohol, cases produced, etc.)

3) Keep a record of whom you visited and what you showed. Write down what they liked and get their card so you can follow up with a thank you, and judge your success against depletions.

4) Be flexible. Remember that distributor reps have a lot to juggle and sometimes have 3 ride-withs a week during busy seasons. Sometimes accounts cancel and sometimes things go wrong; those things are often out of the control of the distributor rep. Besides “moving boxes” you are there to educate and build relationships as a winery ambassador.

The bottom line: ride-withs are an essential tool to build sales for your winery. Although not all of them go as well as you’d hope, you will have some great stories to tell so when you look back on those bad days, you can remember them with a laugh.