Affiliate, or farm in, work represents one fifth of all industry revenue, according to the LCT 2003 Operator of the Year survey. Farm in, or working as an affiliate, are in essence the same thing. Whenever you take a farm in or affiliate job, you, your car and your chauffeur become an extension of that company.
Because of the unstructured nature of affiliate work, many problems arise. Few contracts exist among operators working with each other, so there is no binding agreement. Rather, much of this work is done on a handshake, and often times it is given on short notice, allowing for more miscommunication and mistakes.
“Networks and operators have to agree to what is expected of them,” says Tim Crockett of Air Comm Reservation Network, Worth, Ill. Air Comm handles reservations for various networks and their affiliates around the country, and has contracts with all the vendors that it works with.
Air Comm has 250 contracts signed by operators, something that is done before the first reservation is taken. “That’s the preventive measure to have in place,” Crockett says.
Contracts can include payment terms, rates for service, service standards, records of proper insurance and other items like what happens if either company fails to meet expectations.
When It’s Time to Get Paid
For small operators, getting paid on time, or at all, is a huge problem with affiliate work.
“What terms do they agree to when signing contracts with these networks?” Crockett asks. “A contract takes away the question mark when it comes time to get paid.”
At Air Comm, everyone has a different contract rate for service or a job, based on the market they are in. “I know it puts [small operators] in an awkward position, but they really shouldn’t do the work without a contract,” he says. “And they should insist on that from another company.”
Operators new to this type of work should not expect to get paid immediately. Allow about 60 days to get on file with a company and see the first payment. Robert Euler of King Limousine, Prussia, Pa., says that if you don’t know the operator sending business your way, then you might consider asking for a credit card number as a guaranteed payment.
Carolyn Nelson of Belaire Limousine, Bel Air, Md., has operators who refer work to her fill out a background application with credit references and a bank reference so she can obtain their credit history. She also gets a credit card number from them.
However, in one particular case, she went to run the credit card, and it turned out the card was no good.
And Euler notes that some affiliates won’t provide a credit card number.
Nelson’s rule of thumb is to only do business with operators that she knows and trusts. If you don’t know them, and they won’t give you a credit card number or put your payment terms in writing, then you might consider not doing business with them, she adds. “You need to get feedback from others in the industry to get the truth about another operator,” suggests Jon Epstein of Royal Coachman, Orange, N.J. “You have to go into the [work relationship] with some form of agreement about getting paid and the terms of payment and the expectations you must meet.”
Having a reciprocal relationship keeps the bond strong, says RMA Affiliate Director Lauren Gische. RMA doesn’t use contracts or any written agreements, but because RMA gives work to companies that give it work, she finds RMA is able to maintain a good working relationship with affiliates. “I have two words for working as an affiliate – cash flow,” says Gene Cookenboo of Presidential, Denver. “You have to have it. You can’t loosen the strings on them or let it get out of hand when it’s time to get paid. If you don’t get paid, then you can’t do affiliate work.”
Cookenboo says small operators have to be aggressive. “If you want to get into doing this work, then you have to be willing to get on the phone and talk to [whoever sent you the business] about getting paid,” he says. “You just can’t drag your feet about it.”
And if you’re not getting paid, and have made the phone calls necessary to stay on top of things, don’t take any more jobs from that operator, Epstein advises.
What It Takes To Act As An Affiliate
One thing to keep in mind is what the network’s standards are, Nelson says. “Everybody has different rules for when you do a job for them,” she notes. “You’re conducting yourself as their business and representing them.”
Rob Hansen of Bayview Limousine Service, Seattle, says the larger networks give him what’s expected, their policies and procedures, in writing. The smaller companies who need him to make a run tend to call the day before and ask if he can do a job, but they never discuss their service standards or what’s expected, he adds. Always try to get those standards in writing, Nelson advises. That way chances for discrepancies or that you didn’t do a job properly are minimized.
No matter how last-minute the job is, always get the details in writing and acknowledge that you received them with an e-mail or faxed note.
Make sure the job order has the names and number of passengers, vehicle type, to and from destinations and any special instructions. If you want to get affiliate work, but don’t know how, Euler of King Limousine suggests that interested operators make themselves appealing to the networks. You have to be a large enough operator to accommodate affiliates’ needs, have a good mix of vehicles from sedans and stretches to SUVs and vans. Also, you need to be able to have room for more work, to be able to take the jobs, he says. Hansen of Bayview finds that the biggest issue is properly representing the company that sent you the business. You want to be sure you don’t use your own business cards; that your chauffeur doesn’t use a sign with your company logo on it. And again, give operators who give you a job the assurance that you will take care of their client.
Don’t Try to Steal Business
Nelson of Bel Air finds operators trying to steal business while doing a job can sometimes be a problem. “They want to handout their own business cards while doing the job and they need to realize they are supposed to be representing another company,” she says. Nelson remembers one time another operator asked her at the last-minute to do a job for Bel-Air. All of her vehicles were out on assignment so she asked a friend to do it. The friend undercut her and stole the account. With farm-in work, you have to understand how important the client is, Hansen says. “We actually red-flag all of our farm-in jobs so that we can make sure a really experienced chauffeur is on that one,” he adds. “We look at it as if we mess up the trip for the network, we may be losing one trip, but the affiliate company may end up losing the client altogether.”
Prepare When Giving Jobs Out
From the perspective of an operator who is farming out business to others, the key is to have as many things in place to guarantee the best service from the operator who is actually doing the trip because that company is going to be representing you, RMA’s Gische says. “Every year when we begin work with a new affiliate, we give our standards and expectations, what we require, what we want them to do, in writing,” Gische says. “This covers chauffeurs’ standards, insurance certification, being on time. It’s like an agreement put forth by us.”
Epstein of Royal Coachman says that his company has had few problems with farming work out to other operators, but when they do they have severed the relationship. “Our biggest problem is that we need someone who’s available 24 hours a day,” Epstein notes. “We like to make sure that the affiliates we use have a 24-hour operation or are willing to give us a cell phone for the chauffeur who will be doing the job.”
When RMA farms out a job, it makes sure that it gets written confirmation as well as verbal confirmation the night before, Gische says. “We call them about 15 minutes before they’re expected to pick the client up so we know where the chauffeur is, and we keep in touch so if there are any problems, we can let the client know. It’s the only way we can keep some of the control.”
Network Operator Speaks Out
David Seelinger of Empire International, Norwood, N.J., says his company pays affiliates through a program called Quick Pay. As long as affiliates have loaded their rates into Empire’s software, they get paid within 15 days.
“The problem is that large network companies, not all of them, but many, take advantage of the small operator, and don’t pay them,” Seelinger says. “It’s a shame that it’s that way. It shouldn’t be that way because as a large operator I have a responsibility to pay these people. They cannot afford to carry my receivables and they shouldn’t have to. It’s wrong and it shouldn’t be happening.”
Seelinger notes that getting paid for affiliate work has been an ongoing issue at least since he entered the industry almost 19 years ago. He also says there is another game that some large operators play: They will keep a continual pay balance for an operator who has done jobs for them, leaving them in a haze as to which jobs they have been paid for and which ones they have not.
Time goes by, Seelinger notes, and small operators are still trying to figure this out. “You finally get [the owner] on the phone, who tells you, look let’s just settle it right now. ‘I’ll give you 25 cents on the dollar for that $3,000 you say I owe you. How about that?’ And [the small operator] says to [him or herself] ‘I’m never going to get [the full amount] so let me just settle it. I’ll take it’,” Seelinger says. “It’s a big game and it has to stop.”
He calls the game nonsense. “They have a responsibility to pay these people on time and they should be doing that.”
He advises small operators to stop complaining about not getting paid. “If you can afford to wait 9, 10 or 11 months to get paid, then do it. Don’t do the work if you can’t wait that long because you’re enabling these people to continue to do this. You are not a victim if you are allowing them to do it. Stop playing the victim, stop complaining about it, just don’t do the work.”