Im currently in the process of setting up a direct marketing agency. When set up, we will be out-sourcing design, print and distribution to deliver complete door to door campaigns.

At the moment Im looking into the legal and insurance side of things, and Ive come up with an issue that I really cant work out how marketing agencies deal with ??

How do Marketing Agencies protect themselves financially in the event that one of their suppliers (e.g. a printer) fails to deliver an acceptable quality of work or fails to deliver at all for that matter?

Let me explain with an example:

Our printer messes up with the print, and puts a fold in the wrong place. The print is deemed unusable and cannot be distributed to houses. The campaign delivery dates are tight and there is no time to do a reprint. We have to pull the campaign, and the client demands a full refund for all monies paid.

If we have already paid up front for design, print and distribution and the design house and printer wont refund us, and the distributor gives us a partial refund (less cancellation fee), then we will have to pay the client back everything from our own pocket!

Is this simply a risk I need to take in running my agency, or is there a solution to this?

Can anyone offer some advice?

Many thanks

Ben

p.s. Ive already looked into Professional Indemnity insurance, but policies only cover you if everyone of your suppliers also has PI at the same or greater level of cover as you. Ive called 2 of our suppliers already and neither have PI, so this wont help us.

The first thing i would say is, do not pay up front any supplier. Put them on terms that clearly state payment on satisfactory completion of the job. Secondly, any printer that delivers that kind of work can be sued for breach of contract by delivering goods that were not fit for purpose i.e. they don't meet the specification you gave them.

This is a tough one, but believe me s imple threat to let as many agencies know how shoddy they are at delivering work will bring them around. As for the client, yes he is more than right to demand a full refund for the same reasons you will demand a full refund from your printer.

Hope this helps.

Richard.