The ABC's of Affiliate Work

Posted on August 1, 2002 by LCT Staff - Also by this author

Affiliate work is another way a new operator can bring in business, once he or she makes contact with larger, more established operators. However, there are certain steps operators should be aware of in order to maximize this business relationship.

"Realistically, affiliate work is how anyone still starts in this business," says Chris Hundley, president of The Limousine Connection in North Hollywood, Calif. Affiliate work comprises approximately 15 percent of Hundley's business. "You never have enough business on your own from day one, so you need to introduce yourself to the larger companies to feed off of them and to help get your business up and running," he says.

"It's a good way to build up business without having to look for it," says Cris Haiskey, owner of Towne & Country Limousines, Inc., in Denver. "There are a number of limousine companies in the U.S. that only do farm-in work. This way they don't have any marketing expense, and are not really competing with other limousine companies for the business."

Get to Know Other Operators When you're new to the industry, it's crucial to get your name out to other companies in order to build a potential business and affiliate relationship. "Network with other limousine companies that have the same philosophy, ethics and professionalism as yourself," Haiskey advises. "And be sure to understand what the other limousine company expects of you." "We first get in touch with a potential affiliate," says Alton Hagen, owner of AGENDA: Kansas City, a destination management company in Lenexa, Kan.

"Whether they contact us, which is usually the case, or we have seen them in action and like what we see, if it's reported to us by one of our drivers, the next step is to ask them if they would be interested in working with us on future business."

Put Your Best Foot Forward

"Do a personal presentation," Hundley says. "Call ahead, set an appointment, show your car, shake hands, and get in and meet the affiliate director. It helps them remember you." After 24 years in the business, Hundley is still sometimes amazed at how people show up for an introduction. "We had someone here in L.A. come in who also happened to be a part-time actor," he says. The candidate did not show up in a suit. "My dispatcher had a great line - 'If you were going on an interview for a show, and the part was to play a chauffeur, wouldn't you dress for the part?'" "We ask potential affiliates to come by our office," Hagen says. "It gives us a chance to really talk to them. It's an interview, basically. We want to see what kind of training they're providing their drivers and what their standards are. We're very selective about who we work with."

Have Your Papers Ready

Be ready to show your legal documentation. Hundley tells operators who are interested in working for him to be prepared to give him a copy of their PUC certificate, certificate of insurance and workers' compensation coverage. Some companies will request from you every year a new certificate of liability insurance, and if it's a steady, continuous business relationship, they may request to be named as an additional insured on your policy. Then, if a passenger is hurt in an accident and decides to sue, the affiliate's insurance covers the company because it was initially included as an additional insured on the affiliate's policy. "The ideal arrangement is for them to list us as an additional insured," Hagen says.

"The reason for this is that a certificate of insurance is a snapshot of a period in time. On this date, they had this insurance. But to be listed as an additional insured, technically what should happen is if their insurance premiums are not received and their insurance lapses, and that includes if they switch over to another insurance company, we would be automatically notified by the original insurance company. So we would know that they no longer operate under the insurance umbrella of that particular insurance company."

Hagen prefers not to utilize an affiliate unless provided with a certificate of insurance with his company listed as the additional insured. The prospective affiliate also needs to show proof of workers' compensation. "They either have to show us proof of workers' compensation, or, if they are an owner/operator, they have to sign a letter of understanding with us stating that they are an independent contractor providing their own workers' compensation," Hagen says. "This prevents the situation of the driver hurting his back helping our clients with their luggage and then turning around and filing a workers' compensation suit on us."

Show Me the Money

The problem with affiliate work can be getting paid in a timely manner. Talk to any handful of operators and the stories are varied but usually have a common theme: where's the money? A typical situation: you're doing work for XYZ Limousine Company that is your customer, but you're actually transporting their customer. Even though you are billing XYZ Limousine Company, they have to turn around and bill their customer - which can add a time delay in getting paid since many times people don't want to pay until they themselves have been paid for the job.

Veteran operators advise getting a credit-card guarantee, or at least getting in writing what the terms of the assignment are going to be. "If someone does work for me on a Saturday, they can come and get paid on Monday if they want," Hundley says. "Therefore, I have a relationship with these people so that when I call, they are interested, because they know they're going to get paid. That's the relationship that I want." There can also be complications when gratuities are involved. "Our particular pricing structure is an all-inclusive rate," Hagen says. "We do not have a base plus percentage for gratuity, and we do not want our drivers accepting or soliciting gratuities. So if we receive word from a passenger that a driver, whether it be one of ours or an affiliate, has encouraged a tip, that driver will no longer be working with us. And that's basically a verbal understanding."

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