Why a Horse Biz should say NO to Distribution (PLUS a 25% Discount!)

In our last post we discussed the basic outline of a distribution agreement for horse products.  As you can imagine, problems can often arise between the buyer and seller.  And even with a distribution contract in place there may still be issues that emerge that are contrary to the vision that you have for your horse business.  You should therefore carefully consider whether a distribution of your horse product is the right decision for you and your business, and how you might enforce your brand vision in your contract.

Today we are sharing the story of a great small horse business, Deco Pony, which offers a variety of equestrian purses and products, as well as providing many custom options.  The Deco Pony custom photo stall guard was named by Professional Horseman's as a top 10 gift!  Deco Pony was offered a distribution agreement early in the business, and Jenn Hogan, the company owner, decided to reject the offer.  Here is her story.


I was extremely flattered to be called from a big Equestrian Supply Manufacturer & Distributor saying "they would love to meet with me when they get back into town to talk about getting my bags into stores for the Holidays!"

I had given them a few bags to try out & show around the Rolex 3 Day Event & other venues in the Spring to generate buzz, so they had been using them non-stop ever since. It never ever dawned on me that they might end up liking them so much that they would want to "buy my company." They were in the business of bits, apparel & saddle pads.

Why Distribution wasn't right for Deco Pony for now ~

We met - they told me how impressed they were with the designs & especially the quality & durability of the construction, which was impressive coming from a Manufacturer.
I told them I have been very pleased with my Manufacturer & I am proud to have them made in the USA.
They told me they would love to take over manufacturing & distribution, keeping the Deco Pony name & still allowing me to do my Custom orders on the side, while giving me Royalties. What an offer within 9 months of starting my business!

The #1 reason I chose against the offer ~ I was just getting started & really wanted to see where I could take it on my own. I was absolutely not ready to give my designs away for 5% royalties. It was tempting though, because all I would have to do was turn out a few designs a season - the part I loved doing the most - but not for such a small piece of the pie.

Reason #2  ~ They were going to make them in…. you guess it - China. No thank you - I couldn't sleep at night knowing this was happening. Ethically it was not the right choice for me along with quality & copyright concerns.

Reason #3 ~ Having never been in a situation like this before I was very concerned about what control if any I would end up having over my brand once things got rolling & where would I find a Lawyer to help me negotiate these new waters?

Reason #4 ~ This was my baby were we talking about, it was only 9 months old and I wanted to nurture it along & see what we could do & learn together. My curiosity & pride weren't interested in taking a back seat.

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As you can see, deciding whether and how to distribute your horse products is both a very personal decision, and one based on financial, legal, and business savvy considerations.  I applaud Deco Designs, and any other horse business, for realizing that negotiating distribution waters is certainly an aspect in your business when an attorney should be consulted.  

If you are considering distribution agreements, search "distribution" in the blog's search box to review the relevant posts; this will help you be aware of the general concerns and parameters of distribution of horse products.  You can take these elements to an attorney, which will help reduce the amount of time the attorney needs to work with you to understand your goal and motive to the distribution agreement, and also provide a great foundation for the Distribution Contract.  If the distributor provides you with a contract it would be highly advisable to have an attorney review and talk with you about it to make sure you aren't giving away too much of your business.

As a consumer, have you ever been curious why your tack store no longer carries certain brands?  Did you realize it could be a distribution agreement issue?

And if you are a horse business owner: is a distribution offer something you dream of for your company, or is it something you can't imagine yourself accepting?


Special Offer! For Ribbons and Red Tape readers (the most horse savvy readers around!), Deco Pony is offering a generous 25% off any product! Head to the online store and enter code "Red Ribbons" at checkout. Valid for 2 days only!

Distribution Agreements for Horse Products

We all love "vendor row" at the horse show, but do you ever wonder about the scheme of horse product distribution that goes on behind the scenes? Or want to know how to get YOUR horse product into popular stores?

I recently worked on a case regarding a distribution dispute of riding breeches.  A company provided breeches to a local barn that had a tack shop.  There were several issues that lead to the dispute between the two parties.  I've included two of those issues in this post to help guide your decision-making when you consider distributing your horse product to a retailer (as opposed to direct to consumer).


Payment for Horse Product  
There are a few different ways that payment is handled in distribution agreements, and there are "industry norms" for different types of products.  Money is always the greatest catalyst for dispute, so make sure you are happy with and fully understand the financial arrangement prior to signing a contract.  There are many different blends of structuring the deal, here are two common and straightforward methods:

1. The product is purchased by a tack shop at the supplier's wholesale price.  Tack shop bears all risk for any inventory that doesn't sell.

2. The product will be paid for at wholesale price, but contingent on sales of the product.  Here, the tack shop is motivated to sell the product for the profit margin.  However, any product that isn't sold can be returned to the supplier.  In this situation, the supplier bears the risk for the inventory: the product may be out of style when the tack store decides to send it back, the product may have faced some wear and tear, and now the supplier needs to figure out what to do with the leftover supply.

Promotion of Horse Product
An important part of any horse product is preserving the brand identity and integrity.  A brand may be known for excellent customer-service, a generous return policy, excellent quality, great for a particular horse industry (western, english, etc.), and more.  If you decide to use third parties to distribute your horse product to the consumer, you bear risk of losing control over the brand of your product.  Be sure to include in your distribution agreement whether there are parameters to how the product may be promoted (and give yourself a way out of the third party fails to adhere to your brand's commitment).  Consider:

1. Can the product be put on sale? When can it go on sale and for what level of discount?

2. Can any product be used for sponsorship purposes?  For example, can the local tack store provide local riders with breeches and call the rider "sponsored by" your breeches company, or would it be the local store as the sponsor?

3. Are any of the items permitted to be used without cash payment for the purposes of promotion of the product?  This is similar to the one above, but involves for example a tack store requesting a shipment of 100 breeches, and 10 of the breeches will be given to top riders in the tack store's discretion, and those 10 breeches will not be paid for in cash because the company is receiving valuable exposure through the tack store's contacts.
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If you're a consumer you likely don't think about distribution agreements much, you just want to purchase the products you love with the price and quality that is important to you.  But next time you shop the sale rack at your local store, think about all the mechanics that have occurred behind the scenes to get your favorite horse items to you!

Would you ever consider distribution of your horse product? If so, what limitations would you want to include?

Image Source: Oughton Limited

Keep 'em Safe on your Horse and Don't Lose $300 grand

A recent equine law Florida case provides valuable insights into ways YOU can avoid liability when allowing anyone to ride your horse.
It is such a shame that fear of liability has caused so many of us to become hyperaware and fearful of accidents and lawsuits with our horses.  It makes me supremely cautious to ever allow a friend to ride one of our horses, help lead a calm horse into the barn, or even feed carrots at the risk of a chomped finger!  

First, I'll share a few facts of the Florida case, then Randi Thompson, of Horse and Rider Awareness, shares tips to help reduce risk of injury when guests ride your horse.
 Whether you are a horse business or a private horse owner, and whether you are allowing someone to ride to try the horse prior to purchase, to take a lesson, or as a fun experience, both the Flordia case and Randi's tips will help ensure you can enjoy your horse experience to the fullest while limiting the risk of liability.

Randi Thompson coaching.  Image source Horse and Rider Awareness

The Equine Law Case
A woman owned a horse named Buster.  As part of Buster's diet she fed him a calming supplement from Smartpak, and subsequently wrote a review of the supplement that was published by Smartpak, stating that Buster "can be a little difficult at times, what a difference [the supplement] made in him.  Since he's been on it we've had nothing but great rides."
Buster's owner permitted another woman to ride Buster.  This other woman said that Buster's owner told her that Buster was well-trained.  When the woman applied her legs to Buster to ask him to move forward the horse allegedly reared, she fell and broke two vertebrae.
Apparently someone anonymously sent the injured woman's lawyer the Smartpak review written by Buster's owner.  After four years of legal wrangling and appeals Buster's owner agreed to pay to the woman $300,000 as part of their settlement.

Yikes. My first thought is that just because a horse can be a little difficult at times, doesn't mean he isn't well-trained.  And it was the owner who had nothing but great rides, which says nothing to the riding ability of the other woman.  However, I imagine there are a lot more details to both sides of the story, so here are a few things we can learn from the case:
  • If anyone gets on your horse, have them sign a Release of Liability first.
  • If you allow anyone on or near your horses, err on the side of disclosing that your horse may have MORE quirks to be cautious about, rather than less.
  • As an equestrian, make sure you have the right umbrella insurance policy or rider to your applicable insurance.

Practical Tips
“The Secrets to Teaching a Guest or Rider the Basics"
By Randi Thompson © 2014 Horse and Rider Awareness

What do you do when you have a guest who wants to ride your horse? Would you like a safe process that will let them have fun as they discover how to control a horse?
Your main goal will be to protect your rider. Try to make everything fun, but keep in mind that safety has to come first. Begin by making sure to have a safe, quiet horse. Next, choose a safe location. A fenced in area with level footing is always the best choice.
  • Take special care when the rider is Mounting and Dismounting
  • Let’s ride! To be safe, keep the lead line on so that you have control.  If the rider cannot stop the horse on their own, you cannot let go of the lead line at any time.
  •  Take your time and make sure the rider knows that the horse is moving forward because of what they are doing with their legs.
  • Check that the rider can go in both directions while starting and stopping. As their steering improves you can choose other points of focus and ask them to ride the horse to that spot and stop.
  • Test their controls again. When you are sure the rider is in control, and not before, you can remove the lead line and repeat the process. Stay close to the horse until you are certain that control has been established, and finally, step away. 
  • Some people think it is fun for a new rider to trot or canter. This is where most accidents happen. These gaits are not comfortable to new riders and they will also not be able to control the horse.
Now you have the tools that will give you the confidence to put a rider on your horse. Your goal is simple. Keep them safe first, and keep them having as much fun as you can.

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I know that the fear of liability has caused the decline of casual horse back riding.  But when you take steps to alert a rider of the inherent risks to riding (such as verbal warnings, a signed liability release, and posted signs) AND you take reasonable steps is assessing the rider's ability on the horse before you let the rider independently, then you are far ahead in protecting yourself.  Most states have Equine Activity Liability Acts, but do not rely on these alone because each state's act has exceptions to the liability protection.

I have been riding my entire life, but when I go to try a horse or ride a horse at another barn, most trainers usually hold the horse by the reins while I mount, tell me that the horse may spook in the far corner, and alert me to any other possible risks.  And of course I have always signed a Liability Release before I get on when at a horse business.  Even though I am an experienced rider, I appreciate that the owners or agents of horses take steps to make sure we all have a successful ride.  When these cautionary steps become a part of the everyday make-up of how you conduct your horse business or horse life, it feels natural and not like you are taking the steps out of fear of liability.

I know that lawyers can ruin a lot of things about our great horse sport (by being willing to take some ridiculous horse cases!), but equine law is so great because it provides a vehicle for us to all learn how to conduct our horse lives in a way that ensures everyone, and all the horses, have a better time.  This is what will help our sport grow!


Special thanks to Rate my Horse Pro for sending me this Florida case on Twitter.  You can read the full article at their site by following this link.

You can experience Randi's simple, yet amazing Horse and Rider Awareness techniques that have been tested and proven to work on 1000s of riding instructors, horse trainers, students and horses and can learn more by following this link to Horse and Rider Awareness.