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Little Help Please - Who Owns The Client?

Hi Folks,

I need a little help to see whether or not I was right.
A friend of mine is a saleswoman on straight commission, and due poor treatment, she is about to pack up and go to another company, basically one of her current employer's competitors.

She asked me how much right she has to the clients she brought in over the years.

I told her she had 100% right to notify her clients and move them to greener pastures with her.

My reasoning is that she invests her own time and money to find new clients for her current employer, and in return she has some 10-15% of the reward.

In my view, besides the 10-15% commission, she also has lifetime ownership for the income potential on her clients. Essentially, she's leasing her clients to her current employer for the duration of her employment at that company.

When her employment ends, her employer no longer has the right to pick the fruits that she planted, watered, weeded and nurtured up t the point of harvesting.

What is your thought on this issue?

Thanks

BD - by Bald Dog
No question about it.. as long as her contract doesn't have a no competition clause in it. thmbp2; Oops... well she has right to any "free" business, that is, business free of any contractual obligations to her predecessor. Of course, once they're free, she has every right to compete for their business as does anyone.

Aloha... :cool: ;bg - by rattus58
No question about it.. as long as her contract doesn't have a no competition clause in it. thmbp2; Oops... well she has right to any "free" business, that is, business free of any contractual obligations to her predecessor. Of course, once they're free, she has every right to compete for their business as does anyone.

Aloha... :cool: ;bg
I totally agree!sn; - by The Dynamic Business
Bald Dog

I agree with your reasoning on this one. Not sure her current employer will though! - by marky
Bald Dog

I agree with your reasoning on this one. Not sure her current employer will though!
Employers often don't agree. But it really doesn't matter. I echo what's already been said. As long as there is not an agreement that limits the salesperson's rights, via a non-compete or other clause, the salesperson has the right to make a living, including with former or current customers of the company. - by Skip Anderson
While he/she is employed they have no right to take business away from the current employer.Once emplyment is terminated any sales professional has a right to anyones client base.They must leave their current employer before adding clients to the new company. - by rich34232
While he/she is employed they have no right to take business away from the current employer.Once emplyment is terminated any sales professional has a right to anyones client base.They must leave their current employer before adding clients to the new company.
That is true only in the absence of a non-compete agreement or non-compete clause in an employment agreement. Although non-compete agreements' "enforceability" differ from state to state in the U.S., employers often have deeper pockets for litigation proceedings than former employees have.

One would have to examine it on a case by case basis. Obviously I'm not qualified to give legal advice, but I do advise using caution in such matters. - by Ace Coldiron
While in employment of another you have a moral and ethical duty to the employer to give every effort to the employer for the benefit to that employer.
Example; I work for you and I get paid by you however I work for another at the same time while you pay me.Ethical and a sound practice I think not.
This person is not trustworthy and I would not want them as part of my team. They do it to one company they will repeat the history when they feel they have a problem. Employment history does repeat itself in most cases. - by rich34232
Want to know who owns the client? Ask your legal council. Did you know there are federal legal requirements regarding client privacy? Do you know what the consequences are for bringing confidential client information to your new firm without the client's express consent? Shouldn't you? - by Johnny Fairplay
"Want to know who owns the client? Ask your legal council [sic]."

Sound advice for someone in that situation.

"Did you know there are federal legal requirements regarding client privacy?"

I know of no federal legal requirements as such. It certainly does not sound like a "federal" jurisdiction.

"Do you know what the consequences are for bringing confidential client information to your new firm without the client's express consent?"

I know that they can vary from none to some.

"Shouldn't you?"

My attorney should. - by Ace Coldiron
I don't know how regular sales work, but in insurance when you leave one agency for another there are two ways you can transfer business... but both of them REQUIRE an Agents of Record go with it. One HAS to be signed by the client, the other requires a transfer stop by the client, but in both cases it requires client notification but the critical point here is that the AGENT OWNS his business under our form of agency. AFLAC on the other hand, owns the ACCOUNT.

I'm sure one should check in with an attorney (Pre-paid Legal for example) to look at any employment agreement you have but once you're on your own, I cannot imagine that you're restricted in ANY manner from soliciting any company.

I've seen a lot of non-competition agreements that sales people have to sign over the years, and most sales folks I know have told the companies that if "I'm on commission, I'm not signing ANY non-com." When you are an "EMPLOYEE", that is a whole nuther issue.

There are a ton of rules we are all bound by regarding privacy. Bottom line, IN MY OPINION, is that other than name, address and serial number, I'd not be bringing any information with me about ANY CLIENT not directly related to the product I'm soliciting if similar, and if you're in a new field altogether, I'd not be bringing anything other than a phone number over.

But in MY OPINION, anyone has a right to solicit anyone they choose as a basic right of employment barring a non-competition agreement and any contractual limits between your clients and your previous company.

By the way, non-coms can be recinded.

Aloha.... Tom shds; ;bg - by rattus58
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