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Slinging

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Reply with quote  #1 
We have Sysco South West Florida paying as much as $250,000 for accounts for 3 year deals. I could not imagine working for a company that has resulted to writing checks to grow their street business. 

I would like to know the legalities of this situation? 

What happened to the ethics of this company. They approach the customer give them a check and then raise their prices 15% plus to get their money back. They hurt the customer and take advantage of situations. They make their money back 2 fold and then the customer is in a very bad situation financially long term. 

If I worked there I would be ashamed and this is telling the team they have no intangibles to grow their business threw normal channels in the sales industry. 

Does anyone hear other markets doing this?
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FOOD REP GAL

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Reply with quote  #2 
They (Sysco) have been doing the same thing in my market for a long time.  I see US Foods doing it as well.  I agree with you; this is a long-term bad situation for the customer.  But how do you convince a customer that the up front cash is a bad thing?

I'm wondering what happens after the initial time frame has expired (one year, two years, three years) - if Sysco has to buy the business the first time, won't they have to buy the business EVERY time?

How is the cash handled by the customer?  Is it treated as profit?  As a liability (basically a loan that has to be repaid)?
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Sales424

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Reply with quote  #3 
Sounds like a Cheney rep who is pissed at getting beat at their own game.....
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2 companies down

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Reply with quote  #4 
And it trains the customer. As soon as that term is up, they have their hand out to the biggest offer. I prefer an earned backend rebate. Drop size and prompt pay.
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Winenot

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Reply with quote  #5 
I'm wondering if you're new to the industry, because this has been going on for years.. Sysco, US Foods and most other distributors (big and small) have gotten in on this game.. No, it's definitely not illegal, but its most certainly unsavory..
It's essentially a high interest loan.. And you're right, most of the time it locks the customer in for 3 years and if they want to end the contract they will have to pay whatever the remainder is.. God forbid they go out of business and can't repay what's left over they will either be sued or forced into bankruptcy..The area I work in - this is a very common place practice - and in fact one distributor may buy out another distributors contract to secure that business... I had one customer who had done this and regretted it greatly, and referred to it as making a deal with the devil.. I really feel that's what customers are doing when they enter into these stupid contracts.. Unfortunately some customers need the money and this becomes a very attractive offer on the front end. They are better off going to a bank and securing a personal loan (and having the freedom and ability to buy what they want, from who they want)... Honestly this is what I usually tell customers.. Its really just unfortunate that we can't go out and get business the old fashioned way - and instead have to bribe customers with money to win their business.. Also these are usually very low profit accounts for the rep and sometimes you even get dinged on the commission depending on how they were set up..We certainly aren't looking out for the customers best interest.. The take away here is yes this is a very common practice, it's been going on for years, and it is not going away anytime soon..
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Investigator

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Reply with quote  #6 
With billions of sheltered income dollars flowing in they might as well use it to create a 3rd income stream in the form of high interest loans to a captive client. The biggest irony is Sysco is essentially lending the operator his own money, taken via sheltered income/falsely inflated prices. 
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