Need some advice re Foundation wholesale acct

[Candybee]

I have a small wholesale account with a local Civil War Battlefield Foundation. They sell my soap in their gift shop. The profits are used to help preserve old civil war battlefields, restore them in some cases, preserve and restore the buildings on the battlefield lands, purchase battlefield lands, etc. I really love being a part of that and living in an area full of history.

The soap is doing well and I made a special private label for them with their logo. They also have a relationship with a local merchant I also have a wholesale account with. I also sell her soaps with the battlefield foundation labels on them.

This morning I got an email from the Foundation rep asking for a donation from the soaps I sell to that shop. He also said if I don't he does not know how to handle this. Am I wrong to be concerned? The Foundation makes money from my soap I sell to them. I cannot afford to 'donate' money from the sales of soap from the shop. Shouldn't the shop make the donation? They are making the profit. I make just the wholesale amount for my soap and frankly what he is asking is a hardship for me.

Should I consider not selling the battlefield soaps to the other shop? and only sell them the regular soaps?

This is a new one on me and need some good advice before I answer him. I can afford to make a small donation to the Foundation-- but not on a regular basis. Maybe I should just not sell the Battlefield soaps to the other shop. I thought I was doing the right thing because she sells many of the Foundation items in her shop and the rep goes there periodically to promote the Foundation. So I am a bit confused as their relationship is sending me mixed signals. Help!!

I might add that I also did the Foundation labels, design, text, sizing, etc, for free for them.

Edited August 1, 2013 by Candybee

[marcuset]

If you are fine with donating your goods to this as a charity - sounds fine. Otherwise, I'd pull my stuff. JMO. I'd be honest with the rep & explain the same thing you did with us here - that you're donating as much as you are able, but are still a business. If he doesn't understand that...I'd trust my gut & walk.

Edited August 1, 2013 by marcuset

[ChrisR]

Did the foundation give permission to you or the shop owner to sell with their logo, etc? If not, I would pull them until the shop owner and the foundation come to an agreement. I would say technically the soaps with their logo may be like a copyright infringement.

[Guest OldGlory]

My opinion only -find a new logo for the he battlefield foundation logos on the soaps you sell to the other shop at once. Get those soaps in a new label by weeks end. You could even put "same soap, new label" on the new label.

Apologize to the foundation and explain that you didn't realize it was inappropriate. Smooth it over with the foundation, doing whatever it takes.

Do you think they'll threaten legal action?

[Chefmom]

Hmm, this is a toughie. When you sell the soap to the other shop, you are getting your basic wholesale amount. But, when she turns and sells them under the Foundation logo, does that money go to the foundation, or to her as a sale? I think they are having an issue with the fact the shop is selling "their" stuff and they may not be seeing any money from those sales. I still can't see this being YOUR problem, their issue would be with the other shop owner.

Is the Foundation a Non-Profit? So all of their sales (in their shop) go to the foundation, and not as a profit making shop venture.

You are a supplier, nothing else. But I would drop the logo to the other shop and ONLY sell regular soaps, none from the Foundation logo. You are not responsible for giving them money from the sales of soap, the shop owner who has a "relationship" with them should be dealing with this.

[Candybee]

Okay. Just got off the phone from talking with the Foundation rep. I apologized to him and we talked for quite a bit. Fortunately he was not upset with me or worried and is happy that I am selling to the other shop. He explained that this is a unique situation and he was hoping I would sell to other venues. But when their logo/label is involved they would like something out of it as there have been incidents with other partners that took advantage of them in the past.

What I learned from this experience is to first secure permission prior to selling to another venue-- even if its what they want I want to make sure I have my butt covered.

Also, since I sell at wholesale and don't make a big profit I will adjust my price point so I have a 'special' wholesale price for the Battlefield soaps I sell to other venues. In other words I am going to add on the donation % to the price. That way when I get paid I cut a check for the Foundation and everyone is happy.

If anyone has any further suggestions to add or experiences they learned from in dealing with wholesale please post it. Thanks!!

[Candybee]

What is still unclear to me is this:

When a second party (the other shop) is selling the Foundation's soap-- who's responsible for giving them their donation?

Is it me? Or the shop? or both?

BTW-- I did not talk to him about the Foundation's relationship with the shop. I consider any donations the shop gives the Foundation is strictly between them and not my business.

[SliverOfWax]

I would immediately stop using someone's logo on a product sold elsewhere. Presumably, it's a copyrighted logo and unless you have written permission to use it, you could face heavy penalties. It's your product and you're the one putting the label on.

Now if you stuck your personal label on the product and the shop put up a sign saying a percentage of their profits support such and such an organization, that's their thing.

Doing private labeling for the actual foundation is fine, but essentially, you're profiting by using a private label that isn't yours to use.

Unless I'm missing something, that's the way I see it.

[Candybee]

I talked to him about the labels and he assured me I'm doing exactly what he was hoping by selling to the shop. This situation is unique in that they want and are thrilled to have their soap with their labels sold in other venues and encouraged me to continue selling at more venues when the opportunity arises. What they are asking for is something in return in the form of a donation for using their name/log and that makes perfect sense.

If this were not the situation than things could be a whole lot different for sure.

[TallTayl]

I would never use someone's private label at another venue without express written permission from the brand owner, in this case the Foundation. The whole idea behind private label is "private", trademarks are protected for a reason. Plenty of C&D's are issued daily for copyright infringement, just look at people selling dupes of popular fragrances without proper permission.

Untangle yourself from the mess. It will only get more complicated. If the foundation wants to offer their label to the other store they can work that out between themselves.

[SliverOfWax]

I talked to him about the labels and he assured me I'm doing exactly what he was hoping by selling to the shop. This situation is unique in that they want and are thrilled to have their soap with their labels sold in other venues and encouraged me to continue selling at more venues when the opportunity arises. What they are asking for is something in return in the form of a donation for using their name/log and that makes perfect sense.

If this were not the situation than things could be a whole lot different for sure.

If he's happy, then fine, but I'd get it in writing, just to CYA.

I wouldn't give him anything from the sales, though. The publicity is his payment. Your labor and expense makes the product and unless you can comfortably raise the price say, 10%, then print on the label that 10% goes to support the thing, he should be happy with the publicity.

He's getting greedy, me thinks.

[SliverOfWax]

I would never use someone's private label at another venue without express written permission from the brand owner, in this case the Foundation. The whole idea behind private label is "private", trademarks are protected for a reason. Plenty of C&D's are issued daily for copyright infringement, just look at people selling dupes of popular fragrances without proper permission.

Untangle yourself from the mess. It will only get more complicated. If the foundation wants to offer their label to the other store they can work that out between themselves.

I tend to agree. Offer to sell him as much soap as he wants, wholesale, and let him peddle it to other shops.

[Chefmom]

BTW-- I did not talk to him about the Foundation's relationship with the shop. I consider any donations the shop gives the Foundation is strictly between them and not my business.

I think this is key. Looking at it from a customers side. If I am in a shop that is NOT the official Foundation shop and I am purchasing something with the "official" mark of the Foundation I am going to "assume" that purchasing that product somehow supports the Foundation.

Are there signs or anything in the other shop that states the purchase of Foundation logo items supports the Foundation?

I'm only using Colonial Williamsburg as an example, I used to work there. There is a clear distinction between the Historical District and the rest of the tourist spots in Williamsburg. If you want to support the Colonial Williamsburg Foundation, then you MUST stay within the boundaries of the Historical District. Shop at the shops and stay at the Lodge or the Inn and patronize the taverns and pubs within the district. Everything you buy within their shops is supporting the Foundation, as soon as you purchase items, even items that look similar, those items are for profit and have nothing to do with the actual Foundation.

I think the issue your Foundation is having needs to be taken up with the owners of the shops that carry items of the Foundation. The shop owner, who is profiting from these sales it seems, needs to be clear that the profits, or a percentage of the profits is supporting the Foundation or NOT, which ever is true. I'm not sure how large this Foundation is, but I'm really surprised they don't have a clear policy in their Non-Profit set up, things like this need to be clearly addressed for their non-profit licenses and taxes etc. (that's my inner accountant coming out.)

[classiccandle]

The questions I would ask myself as a business owner are, are my soaps at the other shop selling because they carry the battlefield foundation logo on them or because people like my soap? Are the shop owners carrying the soap only because of the foundation's logo? Will my sales suffer if I remove the logo and replace it with something else?

It sounds to me as if the foundation would like you to spend the time and effort in securing wholesale accounts using their logo and also pay them a fee (donation) for doing so. If indeed you do secure more wholesale accounts and continue to use the foundation's logo it means extra work only for you, not the foundation. If I were them I too would want you to continue what you're doing, but if I were you I would respectfully decline as I doubt the soap is selling because of the packaging. Selling the soap with your logo means more exposure for your business and as it grows you'll be in a better position, fiscally, to make whatever size donation to the foundation you would like.

Just my two cents.

[Candybee]

Lots of great advice here. I now have some more things to consider. I agree I am not in the business of getting more accounts for the Foundation so I have to decide how far or in what way I want to help them exactly.

When I initially spoke with them it was more along the lines of they were going to help promote my products. If I continue selling to other venues it has effectively reversed and I am promoting them. Something to think about for sure. But they do take my soap to sell at their conferences and events, sell online, and in their gift shop.

I like the idea of putting the info about supporting the Foundation on the label. Thats another good idea.

At this time this is a pretty small potatos account. But before it goes any farther or develops I want to make sure I have thought this out. Your ideas and suggestions are helping me a lot. There is some stuff here I would not thought of on my own.