Last Updated 7/11/2018
Staying Out of “Trouble”: Triggers that Flag an Co-Op as "Troubled" on Kickfurther:
For II/IV Co-Ops, the Troubled Triggers are as follows:
1.) Missed Payment – A business does not provide a payment within two weeks of an expected payment date.
2.) Failure to Provide Full Payment for Invoiced Sales - A business does not provide payment, in full, for invoiced sales within two weeks of the payment date.
3A.) Under 50% of Expected Payout - A business has paid 50% or less of what their Co-Op payout period projected as a payout to their backers.
3B.) Under 50% Expected Sales Invoiced - A business has been invoiced less than 50% of an expected sales period, and fails to remit the difference within 14 days.
4.) Inventory Report Not Provided - If the business is required to provide us with regular inventory reports, it fails to provide such a report within two days of the date the report is due.
5.) Beyond Final Payout Date – A business has failed to complete their Co-Op more than 14 days after the expected completion date.
For PO Co-Ops, the Troubled Triggers are as follows:
1.) Production Delay – Consignment Inventory not manufactured, sourced, or otherwise ready to ship more than fourteen (14) days after the estimated shipping date originally provided by Consignee.
2.) Shipping Delay - Consignment Inventory not delivered to purchase order issuer within fourteen (14) days of the estimated delivery date originally provided by Consignee.
3.) Wrong Inventory –Purchase order issuer notifies Kickfurther that inventory delivered does not meet requirements or expectations of the Purchase Order.
4.) Missed Purchase Order Delivery Date – Purchase order issuer notifies Kickfurther that the inventory required under the Purchase Order has not been delivered by the date such delivery was due.
5.) Payment due after payment term – Kickfurther does not receive payment, in full, for the assigned Purchase Order within fourteen (14) days after the payment term, if any, lapses on the Purchase Order or, if no payment term exists, within fourteen (14) days after delivery of the Consignment Inventory
What Buyers can do:
1.) Post a Comment - Buyers can post a comment to a company's Co-Op message board and request information or an update from the Co-Op owner on sales and payback status. Co-Op owners can reply to their Buyers' inquiries and post an update by logging into their Kickfurther business account and clicking on the appropriate tab.
2.) Support the Brand - Buyers who still have confidence in a troubled brand can and should support that brand by purchasing their product, sharing about their brand on social media, or stocking their product and sharing your Kickfurther Store.
3.) Vote of No Confidence – As a last resort Buyers have the option to cast a vote of no confidence if they have lost faith that the business owner is willing or able to successfully complete the Co-Op. If more than 50% of Buyers select this option (weighted by % ownership in the Co-Op), the Kickfuther consignment contract with the Co-Op owner is cancelled. For more information on what happens when a Co-Op is cancelled refer to this post.
What Businesses can do:
1.) If possible make a payment ASAP - Brands are obligated to pay at minimum the required revenue share on any sales of the funded inventory regardless of circumstance. If possible brands are encouraged to supplement sales revenue with other monies in order to keep up with projections. Brands can and should continue to sell funded inventory regardless of Kickfurther troubled status.
2.) Communicate honestly with Buyers - Buyers not Kickfurther decide whether or not to continue working with a troubled business. Business should update Buyers at least twice a month if the Co-Op is troubled. The Buyers HATE being in the dark, and the only thing they hate worse is being lied to, so honest communication is key. If things are off schedule most backers want to know 3 things:
A.) WHY? What didn't happen according to schedule? What issue or obstacle caused sales to be less than projections? (Ex. Delayed production, slow sales, deal falls through, personal emergency etc.)
B.) What is being done to correct the situation? Is the business discounting inventory? Are they able to supplement sales with outside revenue?
C.) What new payback timeline can backers expect the business to follow? If the business can't pay now or can only pay a portion of what was originally thought, what does this do to the payback timeline? When do they expect things will improve? How much longer should backers expect it will take to get a payout or see an Co-Op out of troubled? BE REALISTIC! Being too optimistic is irresponsible. Brands must plan and prepare for bad outcomes and show their backers that they can keep your commitments.
3.) Respond to ALL Kickfurther communications - Kickfurther staff works hard to support the interests of Buyers and brands alike. Even in times of duress, brands must obey their contractual obligations to be responsive and transparent, by responding in a timely manner and providing accurate inventory reports. Failure to respond to Kickfurther communications will be shared with the Buyers and will result in a legal demand letter.
What Kickfurther Does:
1.) Reach out to the business owner to learn about their specific circumstances - Kickfurther makes contact with the brands on our platform on a regular basis and enforces inventory updates through legal demand letters
2.) Request an Inventory Update - We request inventory updates from the troubled Co-Ops on our platform per their Kickfurther consignment contract.
2.) Post a Kickfurther Update to backers - A member of the Kickfurther staff will post an update for business on the Co-Op's comment boards.
3.) Issue a demand letter - Kickfurther may issue a legal demand letter if the business fails to comply with our update request. In some cases, a physical site inspection of the inventory is conducted.
4.) Cancel the contract - If our Legal demand letter is not responded to we will exercise the option to cancel the contract on behalf of the Buyers. For more information on the cancellation process read here.