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  1. #1
    TJ Peterson's Avatar
    TJ Peterson Guest

    Default need a little help

    Hi all this is a great spot to learn!!

    Anyhow to the point. The guy that trained me wants me to come on as a sub-contractor (i think he called it) meaning i have my own company but work for him. He is offering me 30% of the inspection fee for his referals and 50% of the inspection fee for my referals. He said this is the industry standard. Is that true? I am clueless as i have never done anything like this befor... Any help or insight into this is much appreciated.

    TJ

    Inspection Referral SOC

  2. #2
    Join Date
    Mar 2007
    Location
    Austin, TX
    Posts
    375

    Default Re: need a little help

    TJ,

    Welcome to the board. You are right this is a great place to learn.

    35% for referred inspections is what I was offered when I first got into this business. The guy was also wanted to consider me as a subcontractor (so I would have to provide my own insurance, a very hefty expense).

    I opted to strike out on my own as there was no way I was going to make a living working for peanuts for someone else. This might work out for you however, depending on your circumsatnces. I had alternate income so I could afford to be broke for the first year or so.

    Unless the guy is requireing you to sign a no-compete contract I don't know why he should get 50% of inspections that you get on your own, if you are truly going to be a sub-contractor.


    Some things to consider:

    Are you going to have to sign a no-compete (or any other) contract with this guy? Many have very speciifc competiton clauses, although I don't know if they would stand up in court.

    Is he going to provide insurance for you or will you have to provide youir own?

    How many referrals will he actually provide you? Can you survive on 30% of the cost of an inspection?

    Will the 30% rate become larger after time goes by or is it set in stone.

    If you are using your own vehicle, tools, etc. you have to think about the associated costs and how they will fit in with that pay scale.



    As I said, I decided to not work for someone else when I started but I know that will not work for everyone. However, if the guy does not supply you with very many referrals, you may be beter off strting out on your own and taking 100% of every inspection for your own business.

    Just some things to think about.


    Eric


  3. #3
    Join Date
    Mar 2007
    Location
    Healdsburg, CA
    Posts
    1,741

    Default Re: need a little help

    And for those percentages who is legally responsible when it hits the fan?
    Doesn't meet the smell test IMHO.

    Jerry McCarthy
    Building Code/ Construction Consultant

  4. #4
    Richard Rushing's Avatar
    Richard Rushing Guest

    Default Re: need a little help

    Lets Just say you are doing 6 inspections/ week (That's not a bad week...).

    Anyway, you would have 6x inspections/week at the average of (just say) $350 each x .3 = 105 x 6 or 630/week. That's paying for all tools, your own insurance, gas, advertising (which you will need no matter which way you go.

    The key question, how many inspections is this ole boy going to "guarantee" you-- the truth is, he can't *guarantee* a certain number/ week because of a) being seasonal and b)the economy.

    Also, will your economy support a greater fee/inspection or does the economy look like it is headed south there?

    Good questions, you need to ask yourself.

    RR


  5. #5
    Join Date
    Mar 2007
    Location
    Ormond Beach, Florida
    Posts
    25,314

    Default Re: need a little help

    Quote Originally Posted by TJ Peterson View Post
    He is offering me 50% of the inspection fee for my referals.
    So ... you are paying him 50% of YOUR business ... for what ... exactly?

    Also, as a sub contractor, YOU would have to be in charge of YOUR schedule, YOU would also have to meet something like 20 other points for the IRS to consider you a Sub Contractor and not an Employee.

    Why give him 50% of YOUR part of the business ... if you are indeed a sub contractor.

    Does not meet the smell test.

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  6. #6
    Jon Randolph's Avatar
    Jon Randolph Guest

    Default Re: need a little help

    Usually (at least from the few that I have talked to) this sounds like an employer/employee relationship. You get a small portion of the standard fee with an increased percentage for a person actually asking for you which comes as a referral by others to you. As an employee, you should be covered under his insurance and not have to provide your own. All liability should ultimately fall to him unless gross negligence is involved. He should also provide all equipment needed including the vehicle.

    You would usually be required to sign a non-compete clause for maybe up to 2 years, which means that you can not market yourself and compete against him for a period of 2 years after your relationship terminates. This will create quite a bit of hardship on your part should you ever decide to stop working for the man and become "the man".

    It would actually be hard to meet the IRS definition as a contractor under the agreement that you described.


  7. #7
    TJ Peterson's Avatar
    TJ Peterson Guest

    Default Re: need a little help

    Thanks for all the replys. I guess I sould have gave some more info. I am almost done with training and before we finish he wants me to sign a no compete. Then this was the deal he was offering. I guess i need to sit down with him and go over every thing a bit more but I definatly dont like those numbers. Keep it coming yall, Thaks again

    TJ


  8. #8
    Join Date
    Mar 2007
    Location
    Ormond Beach, Florida
    Posts
    25,314

    Default Re: need a little help

    I see you are in Florida, where in Florida (just curious).

    It is hard enough to enforce a non-compete signed BEFORE the relationship STARTS, but signing one when the relationship is about to finish ... WHY??? Why would you?

    The ONLY reason I can think of it so keep doing some of HIS work while building YOUR business, and, while that is understandable, every time you are doing HIS work, you are missing out of building YOUR referral base for the future.

    I don't know who you are currently working for, but that non-compete, as almost useless as they are here, should have been signed *before* your employment with him started (from his perspective), from your perspective ... be glad it was not.

    This is absolutely one of the major pitfalls of working for someone for a while and then going on your own, and the pitfalls affect both parties, albeit differently.

    added with edit: By the way, please update your profile to include your city, that lets us know more of where you are located - thanks.

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

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