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Discussion Starter · #1 · (Edited)
Hello all,

Looking for legal advise. I have an interesting scenario here. I haven't included names for privacy copyright purposes. For 7 years an independent company contracted my GC business to perform in-home installations of prefabricated closet systems for their major retail client. They signed me up as their exclusive contractor within a 100mile radius. Instructions were to build a crew to handle the increasing volume annually. I was able to recruit up to 10 installers whom I personally trained, mentored, subcontracted and paid directly. The structure was widely accepted during the first 5 years. Here's where it started to become unstable, the independent company got bought out by the major retailer. Prices dropped and volumes doubled. Great for business!! Then the retailer got publicly traded. Investors influences kicked in after 2 years. They didn't renew my contract and asked me to step down within 2 weeks. They went straight to my subcontractors and offered them individual contracts at a significantly lower price to carry on installing. Based on our loyalties to each other, My subcontractors asked if I had any other projects for them and that they would rather go with me. I said "Not within the span of 2 weeks as I'd dedicated all my time trying to grow the business around the retailer.". So most signed on and scored contracts while I got dropped. I guess my next question is as a licensed general contractor, how ethical was this take-over and what legal actions can I take to get some settlement on at least consultation fees. Any word of advice is greatly appreciated!
 

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You are out of business----


I'm surprised you did not see that one coming----

I doubt if you have legal recourse---have you spoken to your attorney about this?

When you only have one customer and that customer goes away you are done.
 

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Have Trowel, Do travel
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sorry 'bout your situation and you will be entering a dark tunnel,

-All the eggs in one basket- comes to mind
 

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Hopefully in the last seven years you saved a big wad of cash. It may not be ethical but it sure doesn't sound illegal, actually sounds like the usual and frankly EXPECTED outcome. What are the chances you had your subs sign non compete agreements? I'm betting slim to none and slim just walked out the door. Maybe one of your former subs will hire you?
 

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The Ultimate Wire Hider
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The interesting thing about big corporations is that they have lawyers who are always running the scenarios to determine what they can "legally" get away with. Trust me when I tell you, they've already figured out every move that you can possibly make and they have every single counter measure ready in case you decide to take action against them.

But the one thing that you have that they don't have is that relationship. The first time that one of your subs doesn't show up for a job and/or doesn't answer his phone, the next person that they are going to call is you. That's where you'll be able to use your leverage if you even decide to do business with them again.

As unlikely of a scenario this seems be, they always call you back. There is a reason why you are the contractor and they are the subs. As a GC you have the ability to replace and mobilize more subs if a sub calls out sick or has some other issue that prevents them from getting on site. People who want to cut out the middle-man don't quite understand this until they get left high and dry.

To this day, I have a nagging former client who decided that she wanted to deal with my sub "Joe the plumber" directly. But every time Joe doesn't show up as promised or he does damage, she expects me to do something.:rolleyes:
 

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I own stock in FotoMat!
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"Your" subs? When did slavery become legal again? :whistling
 
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Working
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IMO you messed up. You have no legal action they found some one cheaper to do the job and like 480 you don't own your subs they can work for who ever.

Cole
 

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KemoSabe
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If I were in "your" subs position and you told me "Hey, s#!t hit the fan and I have no work for you, nor can I promise you anything in the near future.", I would mind "my" business and do what is necessary to feed my family and myself, as I have done several times in the past.

"Your" subs are not employees, they are business owners and business is business. If you think their actions are unethical, you have the right to disassociate yourself from them in the future. This may or may not be in your best interest.

I've been down that road with GCs who believe I owe them my life because they fed me work for X amount of years. Well, they fed me work because I offered them the best value for their dollar, otherwise, I wouldn't have been doing their work.


Just a quick thought. What would you have done if the company said to you "Listen, we're willing to keep you on, but we need you to release all your sub-contractors and use "our" subs."? Would you have been loyal to them?
 

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The Ultimate Wire Hider
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I've been down that road with GCs who believe I owe them my life because they fed me work for X amount of years. Well, they fed me work because I offered them the best value for their dollar, otherwise, I wouldn't have been doing their work.
Very good point!
:thumbsup:
 

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You had one customer and no employees, only sub-contractors? It was inevitable that at some point, somebody in your customers organization was going to question your role, and what you did to earn your keep.

There's no question of ethics anywhere here, either with your subs or your customer. You got lazy and greedy until the market left you high and dry.
 

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Jesus, you guys are gonna make him jump off a bridge. I'm sure the point is taken that he doesn't own the subs, and working for 1 client wasn't a great move. This is the part of the movie where you let it go, adapt your plan, and build back up. To quote rocky " it's not how hard you can hit, it's how hard you can get hit and keep moving forward. That's how winning is done.-compressed version. :)
 

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Particulate Filter
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I think the only way you could have played it would have been to lie to your subs and start your own closet company. Compete with the old chain until you make it or they buy out tk get the market and the subs. Better still was to have built your company prior to this issue. Hindsight and all that. What do you want yojr new company to be?
 

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Discussion Starter · #16 ·
Lesson learned I guess... The subs did sign non-compete forms and non-disclosures but I guess at this point it's useless because it would be totally against their favor. Plus I'm sure everyone here is on point with me only having 1 client. Onto the next venture it is....
 

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480sparky said:
You'd be surprised how many think they DO. And not just own the subs, but the customer and all future work as well.
yeah that's a whole other thread there. While I'm well aware that subs are free to do whatever they want, I will say this. If my customer solicits them and they don't tell them they have to speak to me, they won't be my sub anymore. If they do work for one of my customers down the road without contacting me first, they will no longer be my sub. Just as they are free to do whatever they want, I'm free to protect my customer base.
 
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