3 Things to Look for When Signing a Contract with an FRC Supplier
Now that you’re on your way to selecting an FRC supplier for your company’s FR clothing program, what should you know before signing the contract? This post outlines important aspects of the clothing purchasing process with regards to the terms and conditions you’re agreeing to, as well as the length and exclusivity of the contract you are signing. Another very important, but potentially overlooked, consideration is how often your company – and employees – could experience price increases on your FR clothing. Before you enter into a contract, the following are three key terms to look for:
- Exclusivity of Contract
- Price Increases
FRC suppliers indemnify customers when they use protective products as expected; they are backing up their word with regards to the quality of their garments. Usually quality comes in the form of clear warranty language. In the event of a manufacturer’s defect, a quality supplier should offer to repair or replace garments at no charge to you, the customer. An FRC supplier willing to make a financial commitment is important, as is having adequate insurance to make good on their indemnification.
Why it matters to you: If a supplier is willing to indemnify their products, they are confident their products will perform the way they should. Quality is an important factor regarding indemnification related to flame resistant treatment. A supplier will not indemnify their goods if, for instance, the FR treatment were to wash out of their garments over time. It’s important to note that there are certain circumstances under which indemnification would be ruled invalid, such as wearer negligence in not following their company’s work procedures or if FR or protective garments are not used for their intended purpose, as outlined on the product label. Indemnification is security for you, the buying company, to know that your FRC supplier is reinforcing their commitment to protecting your workers. A supplier’s willingness to indemnify a customer is an important part of choosing a quality FRC provider.
Exclusivity of Contract
An exclusivity agreement is a contract between companies to maintain dealings only with each other. One of the most important features of this type of contract is the time frame that it specifies. Typically, an exclusivity agreement will stipulate that the companies involved will not engage in business activities with other companies for a specified period of time. More specifically, buyers of FR clothing will agree to purchase only goods from one particular seller.
Why it matters to you: Exclusivity agreements matter to you because they could lock you into a long-term contract even when the products or services do not meet your expectations. The first important step is to do some research into the company you’re entering into an agreement with. Find out everything you want to –and need to know – about the FRC supplier: the way they work, their support structure, their work ethics, etc. Request references from the supplier so that you understand what it’s like to do business with them, from a company that is a current customer. While you are getting to know the company, you will likely want to find out the reason behind an exclusivity agreement, if one exists in their business dealings. Additionally, exclusivity agreements could be partnered with some sort of termination penalty or buyout clause should you want to terminate the contract early and seek out another FRC supplier. Industrial laundry contracts frequently include buy-out clauses with high termination costs. A four year contract (or more) with full liability on signing means no incentive for an industrial launderer, for example, to provide good service. Please read our previous post for more information on The Ins and Outs of FRC Laundry Rental Contracts.
Automatic price increases often speak to the transparency of the overall contract. What else is the supplier potentially hiding within its contract language? What other costs exist that can’t be easily verified or budgeted? The last thing you want is to be caught in a contract where annual price increases are done across the board automatically without sufficient warning that this could happen when you first signed the deal. Notifications of price increases should be made clear and should be easy to understand.
Why it matters to you: Most companies have it written into their request for proposal (RFP) or initial program solicitation that prices must remain fixed for a certain amount of time (i.e. one year). After that period of time, prices can be adjusted according to an agreed upon price index, such as CPI, or prices may be eligible to increase by a certain percentage provided they can document evidence of cost increases for raw material, etc. Price protection is an agreement whereby a buyer and seller fix the price of good – FRC in this instance – for the duration of the contract or other specified period.
In the end, you want to select a provider that can get your employees the apparel they need, when they need it, and at a price your company is willing to pay. FRC is considered the last line of defense and its primary function is to protect workers in the event of accidental exposure. What most companies don’t consider is that FRC does more than protect your employees; it can protect the company as a whole as well. In fact, the cost of one serious burn injury can be significant – often exceeding the cost of an entire FR program!
In the end, how do you know if you’re getting the best deal from your FRC supplier? The most important factor in an FR clothing program is that employees have their garments to wear and protect them on the job – and as of July 10th, this is now law per OSHA 1910.269.*
*It should be noted that OSHA has issued a temporary enforcement delay on citations under the new rule until October 31, 2014.
Visit www.tyndaleusa.com to learn more about an FRC or arc-rated clothing program that can be customized to fit your needs. Not only will there not be complex contracts to decipher, but you can also select from FR clothing your employees want to wear!
This is the fourth post in a series looking at Keys to Selecting an FRC Clothing Supplier. Click here to read the third post of the series on The Importance of FRC Suppliers’ Inventory and Manufacturer Relationship. The final post will cover How an FRC Supplier Manages Your Clothing Program Can Impact its Success.