When should I stop negotiating?

Monday, December 22nd, 2008

Dear Norm:
For eight months I’ve been negotiating a licensing agreement with a company to produce a toy I’ve invented. The process has been painfully slow. I’d send a proposal in; the company would ask for changes; I’d compromise; the company would ask for more changes; I’d compromise again. At one point, my contact insisted on taking the contract to a lawyer—who tore it apart. So we started all over again. After several more months of this, I received a fax demanding a whole new set of changes. I couldn’t believe it. I’m beginning to think that my negotiating partner isn’t serious. Whenever we get close to signing, he comes up with more stuff to change. At what point should I give up and move on to another manufacturer?
John

Dear John:
You shouldn’t be surprised at what’s happened. Good negotiators always try to get the best deals for their company by taking as many bites of the apple as the other party will allow. Your problem is that you let the other side set the ground rules. You should have insisted up front on separating business issues from legal issues and not letting lawyers raise business issues after they’ve been settled. I’d advise you to tell your contact something like, “I’m sorry, but I’ve gone as far as I can at this time. I still think that your company is best for my product, but you’re leaving me no alternative other than to look elsewhere. Maybe I’ll find out I’m being unrealistic. If so, I may come back.” If the guy says you can’t come back, he probably wouldn’t have done the deal anyway.
Yours truly, Norm

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