Exit Clauses
Some groups charge for a member to leave the group, especially if they don’t charge any upfront fees to join. The groups that charge upfront fees and don’t have an exist buyout clause can make it easier to leave. Though it is less common, some groups may have both entry and exit fees. Prospective members should read the group’s contract, have it reviewed by an attorney and pay particular attention to the exit clause. While no agency should join to immediately leave, knowing what the exit clause contains can make a huge difference from group to group. Don’t allow yourself to be surprised by the exit clause when you need to leave; plan in advance by knowing what the clause contains. Sometimes it may be worth paying more upfront to have the freedom on the backend. Remember, groups that allow for freedom are easier to hold accountable.
Ability to Sell Your Agency
Will the group allow you to sell your agency on your own so you can maximize the agency’s selling price? This feature may depend on the exit clause discussed in the previous section. Also, if you sell, does the buyer have to continue membership? If so, it can be harder to sell, and a seller may not get their full potential price because of that restriction. Some groups may only allow for a buyout option with a fixed selling price, while others may ask for right of first refusal. The more flexibility you have in selling your agency on your own, the greater the chance you will have of getting a higher selling price. This is a very important restriction to know before joining a group.
Be Reasonable
While agencies should find the group that best meets their needs, if their expectations are unreasonable, they may find themselves without a group. Almost every agency network is a for-profit enterprise that provides valuable services to their agency members, and they cannot possibly do it without making a profit. While some may be open to negotiations, agencies wanting to negotiate unreasonable terms are going to make themselves undesirable, causing the group to lose interest in the agency. Being an island on your own is a very difficult way to run an insurance agency in today’s environment. Remember to always keep it professional and cordial, and never cross the line thinking you will get more, because it may do more harm than good.
By asking these key questions and following the suggested investigative steps, you will be able to select and join a group that offers your agency benefits that will grow your book with a network of support.
