November/December 2004
Cheat Sheet: Exhibitor Contracts

If worded properly, exhibitor contracts can improve cash flow and make the operation of an event more efficient. Here’s how.

By Linda C. Chandler

Setting Payment Deadlines
Many shows require the first payment 30 days after this year’s show, with payment in full 5-7 months before next year’s show. Some factors to consider:
• Set deadlines early enough to establish cash flow to meet your contractual obligations with the venue, as well as pay for up-front costs of marketing or other expenses.
• Give the sales team enough time to sell but leave enough time to get a floor plan set before print deadlines.
• The amount of leeway you can allow between when deposits or payments are due and when you must pay your vendors depends on how much you’re relying on those payments to pay your bills. Setting deadlines too early means some exhibitors will not get in or may have to go on a wait list. Too late means you may not be able to collect the cash to pay your bills in time; marketing and print deadlines may need to be moved back and there may not be enough time to sell replacements for cancellations.

Payments and Deposits
• A signature on a contract is binding even if no deposit or payment is made, provided that you don’t make payment a condition of contract. Encourage the sales team to confirm each booth with a contract even if the deposit is to follow.
• The amount you charge for a deposit or first payment should not be so high exhibitors are afraid to make a commitment but should be high enough that exhibitors take the commitment seriously. Deposits or first payments are generally from 33 percent to 50 percent of the total cost.
• Set deposit deadlines in the contract. Follow up on late payments, but practice a little leniency if needed. If the payment is too late, however, the exhibitor will probably cancel anyway and confirming it will lessen the planning hassles for show management.
• Make it easy to get paid. Accept credit cards, electronic transfers and checks.
• Most shows don’t allow exhibitors to set up if they’re not 100 percent paid, and many schedule two (50%-50%) or three (50%-25%-25% or 33%-33%-34%) payments.

Cancellations and Downsizing
• Make sure the contract specifies fees for cancellations and downsizing booth space and that exhibitors must send notice of cancellation in writing.
• Make personal contact and try to recapture business if an exhibitor wants to cancel or downsize. If the exhibitor can’t commit to the current show, attempt to roll over the business into the next show.
• Downsizing and cancellations can mean restructuring the floor plan, additional time for fire marshal and facility approvals, and a changed look of the show because of shifting booths. Be sure cancellation and downsizing fees compensate you for the trouble and added expense you’ll incur.

Refunds
• Generally, contracts shouldn’t allow for refunds. Cancellation fees that are less than 100 percent of the deposit or amount paid to a point, in effect, give partial refunds if the show organizer can’t reconvert the cancellation or downsize request. But in the contract, don’t provide for refunds after final closing of sales for the show.
• On a case-by-case basis, allow refunds only in worst possible scenarios or truly extenuating circumstances, such as an international exhibitor unable to get a visa or a death in the family of a mom-and-pop vendor.
• Remember, any exceptions you make should be reasonable and fair because other exhibitors eventually will hear about it.

Collections
• Attempt to collect at every stage of the contract. If your contract requires two advance payment dates, and the second one is missed, don’t wait until the third and final payment is due to find out what’s going on.
• Use the salesperson as the initial contact when a payment is late to give a gentle reminder. However, if the salesperson cannot easily solve the issue, refer collection to another staff person to preserve the salesperson’s relationship with thier client.
• If there are extenuating circumstances with a long-time client, you may want to accept a payment plan rather than lose the client’s presence at your show.
• Follow phone prompts with e-mail or written invoices or letters. Document every contact.
• Send a written notice of cancellation for failure to pay.
• If a balance is turned over to a collector, make sure the collector’s first job is to do everything to recover the business, not make an enemy.

Contract Breach Issues
• Be sure your contract references your show’s policies and procedures, exhibitor’s manual or exhibitor rules, their displays, their contractors and their personnel. An exhibitor failing to follow the rules can be held in breach of the contract.
• Refrain from making any promises as to turnout or show size. Booth size (but not location) and other services that the show organizer is providing (such as decorating or electrical) may be specified by contract. Don’t misrepresent the show. The best way to protect your cash flow is to avoid being sued.

More from EXPO
Read back articles related to this topic:
Whose Floor is it Anyway, June 1997
http://expoweb2.pubdyn.com/Show_Management_101/0697_floor_arc.htm
Limiting Show Liability, July/Aug 1995
http://expoweb2.pubdyn.com/Show_Management_101/0895_liability.htm
Show Rules and Regulations, May/June 1993
http://expoweb2.pubdyn.com/Show_Management_101/0693_rules.htm
Shape Up Your Exhibitor Contract, Sept/Oct 1990
http://www.expoweb.com/Exhibitors/Sept1991015200424404PM.htm

Sources
Marcus Arky, MetroGroup, www.b2bcollector.com,  (212) 425-7774
Wayne Crawford, National Association of Broadcasters, www.nab.org,  (202) 775-3528
Jason McGraw, InfoComm International, www.infocomm.org,  (703) 273-7200
Mark Roysner, Roysner & Associates, (818) 224-8095
Jack Withiam, George Little Management, www.glmshows.com,  (914) 421-3225