Southwestern Company

Southwestern
Private
Industry Conglomerate
Founded 1855
Founder Rev. J.R. Graves
Headquarters Nashville, Tennessee, United States
Key people

Henry Bedford, Chairman and CEO of Southwestern

Spencer Hays, Chairman of The Executive Committee
Slogan We Build People
Website www.southwestern.com

Southwestern owns Southwestern Advantage, previously known as Southwestern Company, it is a company that recruits and trains college and university students to sell educational books, software, and website subscriptions door-to-door using direct selling methods. Students participating in the program are independent contractors, not employees of the company, selling the products directly to private families at retail for delivery at the end of the season.

History

In 1855, Southwestern Publishing House was established in Nashville, Tennessee. The company's name was chosen because, at that time, Nashville was in the southwestern part of the United States. Founded by the Baptist minister James Robinson Graves, Southwestern originally published The Tennessee Baptist, a Southern Baptist newspaper, and religious booklets which were sold by mail for 20¢ and 30¢ each.

Prior to the Civil War, most Bibles were printed in the North, rather than the Confederacy. Graves acquired stereotype plates from the North and began printing Bibles for sale in August 1861. Southwestern also produced and sold educational books.[1]

The December 1864 Battle of Nashville resulted in a Union victory. Feeling vulnerable due to articles he had published against the North, Graves relocated to Memphis. The company resumed publishing in 1867.[1]

After the Civil War in 1868, Graves discontinued the company’s mail order business model, and began training young men as independent dealers to sell Bibles and educational books door-to-door as a way to earn money for college. Graves retired in 1871.[1]

In 1879 the company relocated to Nashville under the new ownership of Jacob Florida.

In 1899, P.B. Jones, a twenty-two year veteran who started in the summer sales program, acquired majority ownership of the Southwestern Publishing House becoming its President and General Manager.

In 1921, J.B. Henderson, a sixteen-year veteran who started in the summer sales program, became the sole company owner. During the 1920s, Henderson grew Southwestern to one of the largest person-to-person sales companies in America.

By 1947, Southwestern had lost nearly all of its independent dealers as a result of World War II. J.B. Henderson, Dortch Oldham, and Fred Landers, each of whom left to serve in the Pacific during the war, struck a deal to rebuild the company with Henderson serving as President. Throughout those next twenty years, Southwestern experienced tremendous growth as the United States rebounded from the Great Depression. Led by Fred Landers, Spencer Hays, and Ted Welch, the number of independent reps grew to over 1,500.

In 1959 Oldham, a twenty-four year veteran who started in the summer sales program, became the majority shareholder of Southwestern; an ownership role that would last until 1968 and a presidential role that would last until 1972.[2]

In 1968, Times-Mirror Company acquired ownership of Southwestern.

In 1972, Spencer Hays,[3] a fourteen-year veteran who started in the summer sales program, became its president.

In 1975, Times-Mirror formed a fund-raising company called Nashville Educational Marketing Services under Southwestern, later to be renamed Great American Opportunities.

Jerry Heffel became the company's president in 1980. In 1982, Spencer Hays, Heffel, Ralph Mosley, and other executives organized to purchase Southwestern and sister-company Great American Opportunities by leveraged buyout from Times-Mirror, forming Southwestern/Great American, Inc. Hays was named executive chairman of the board and Ralph Mosley was named chairman and CEO.

In 2011, the sales and leadership program and its operating unit updated its name to Southwestern Advantage.

Southwestern earned position 4,832 on the Inc. 5000 list in 2012 of the fastest growing private companies in the United States.[4]

Southwestern Advantage Sales & Leadership Program

The company recruits a few thousand American and a few hundred European university students each year to work as independent contractors who sell educational books, software, and subscription websites during the summer months. Student dealers come from many universities worldwide.[5]

The president of Southwestern Advantage admits that selling books door-to-door is "incredibly hard, frustrating work" and not for everyone. Experienced dealers say the program provided them needed funds, boosted their confidence, and taught them to stick with a project despite adversity.[6] The program does not offer any guaranteed pay.[7]

Program

The company operates on a structured network marketing platform where student dealers participating in the program are independent contractors, not employees. The money they earn is solely determined by their sales revenue minus their expenses and the cost of goods sold. They do not receive wages or employee benefits.[5]

Students provide the company a letter of credit signed by two endorsers, typically the student's parents, in which the endorsers agree to be responsible for up to $500 each if the student fails to pay any money owed to the company at the end of the summer. This endorsement allows the company to ship startup books and sales materials to the student without requiring payment in advance.[5][8]

Students entering the program attend a week-long Southwestern Advantage Sales School in Nashville, where they learn the product line, how to make customer presentations, and the company's requirements for running a book business.[9] Students are responsible for the cost of travel to and from training, and for their personal expenses (food, gas, and $100 for company-subsidized lodging). The company does not otherwise charge for training or the product sample kit.[10]

At the conclusion of the training program, students are assigned to a sales area outside their home or school states. Sales areas are predominantly suburban or rural. Dealers are advised what they should be selling, and to obtain solicitor's permits where one is required. Permit fees are a business expense paid by the student, with the company reimbursing 50% of permit fees.[11]

Working conditions and income

Students typically pay rent to a host family in their sales area, sharing expense one to three other students of the same gender. Host families are found in the same way the products are sold, by knocking on doors and asking people for referrals to families interested in hosting for the summer. Students pay rent weekly and provide their own meals. Housing is not guaranteed by the company.[5][12]

Dealers report working 72 or more hours per week, Monday through Saturday, typically from 8 a.m. to 9 p.m., making 30 or more presentations each day. The hours worked apply to time actually spent in the field and do not include time spent on bookkeeping, talking to managers or at sales meetings held each Sunday.[5] According to the company, in 2010 the average first-year dealer who stayed with the program for over 20 days grossed $2,415 per month before expenses.[13] Total expenses for the summer vary by the individual, but range from $1,500 to $3,000.[5] As independent contractors, dealers pay their own travel and living expenses, which are tax-deductible. Dealers must pay an additional 7.65 percent in Social Security and Medicare taxes to match the percentage normally paid to these agencies by an employer.

At the end of the summer, products are shipped to the dealers, who revisit each home where they made a sale to deliver the product and collect any balance due. Dealers generally pay their living expenses out of the down payments they collect, remitting the rest to the company to cover wholesale costs. Dealers return to headquarters in Nashville, where they settle accounts and receive a check for the season's earnings.[5] Some dealers are invited to return in subsequent years as managers, who recruit their own teams during the school year and earn a percentage commission on the sales of their team, as in network marketing.

Products

Southwestern Advantage publishes and markets educational books, software, and subscription websites. The main product, Southwestern Advantage, is a series of educational reference books targeted to school-age children. The product line also includes software, college prep material, and others.

Criticism

Criticism about the operations of Southwestern Advantage revolves around its recruiting practices and the financial risk to students whose profits from sales do not substantially cover their expenses. Because they are independent contractors, Southwestern Advantage expects students to fully finance their living expenses similar to any other career job. Southwestern Advantage does not pay for expenses like food, gas, or rent. In addition, expenses of the required Sunday meetings with managers are not covered by the company, but by the students themselves. Foreign students in particular carry a major financial burden, as they must pay for their visas and airfare themselves.[14]

Students are taught to indirectly ask if there are other families in the neighborhood who may have small children.[15] Such questions have sometimes been regarded as suspicious, resulting in complaints to local police, close police scrutiny and even an arrest for disorderly conduct.[16] By traveling door to door, students sometimes draw the attention of local law enforcement.[17] Local requirements are reviewed by the company prior to the summer in order to sell products legally, and Southwestern Advantage offers assistance in the event of permit issues. Students are encouraged to leave their cellphones at home to focus on the task at hand, but it is not required.[14]

Harvard University banned Southwestern from recruiting on its campus in 1977; four years later Southwestern resumed recruiting despite this ban.[18] In 2005, the University of Maryland banned Southwestern from recruiting on its campus; as of 2009, however, the University continued to receive complaints against the company.[19]

In 2007, Southwestern Advantage lobbied against a bill introduced in Wisconsin to regulate door-to-door sales crews and require companies to pay their dealers as salaried employees. The company argued that their independent contractor business model nurtured the entrepreneurial spirit.[20][21] During the hearings, former Southwestern student dealers testified on both sides of the issue.[22] The intent of the bill, known as Malinda’s Traveling Sales Crew Protection Act,[23] was stated by Wisconsin governor James E. Doyle as to "stop companies from putting workers in dangerous and unfair conditions". The bill was passed in a form that applies only to sales workers who travel in groups of two or more.[24]

In the UK University of Durham's campus in 2005, the Durham Students' Union, stating that the "Southwestern Company 'experience' is not marketed as openly as it could be, and some students may be misled", banned Southwestern from Dunelm House and mandated the union president "to liaise with Southwestern Books to work towards marketing which is clearer and to ask the company to develop its recruitment process to ensure Durham students are aware of the risks and pressures that the job entails."[25]

The Guild of Students at the University of Birmingham passed a motion in May 2006 banning the company from its premises and encouraging the University to do the same.[26]

In 2010, the University of Idaho announced that Southwestern Advantage is prohibited from recruiting on campus due to misconduct and violation of University and Career Center policies.[27]

A non-binding motion was passed at the 2010 AGM of the Students Association at the University of Edinburgh banning the company from all union premises.[28]

Notable alumni

Subsidiaries

Between 1982 and 2013, Southwestern acquired or established a total of 10 companies internationally. These companies' services include fundraising, financial services, executive search and others.

In 1982, Southwestern acquired Favorite Recipes Press (FRP) from Fuller and Dees as a custom book publisher focused on cookbooks to be sold for the purpose of fundraising. FRP later expanded their custom publishing services and was renamed Southwestern Publishing Group in 2011. Also in 1982, Carl Roberts, who began in the summer sales program, established an executive search company called Southwestern Business Resources (SBR). In 2012, SBR was renamed to ThinkingAhead Executive Search.

In 1989, Family Heritage was started as a supplemental insurance company. In 2002 Southwestern Investment Group, a Raymond James Financial affiliate, was founded In 2004, Southwestern acquired majority ownership of Wildtree, a direct-sales company which sells culinary products through a party plan. In 2007 Southwestern Real Estate, a residential real estate brokerage company was founded. In 2012, Great American Opportunities acquired the assets of QSP making Great American Opportunities the largest school fundraising company in North America. Southwestern also sold the assets of its Family Heritage insurance business to Torchmark Corporation in October 2012.

See also

References

  1. 1 2 3 E. Michael Fleenor, "The Southwestern Company," Tennessee Encyclopedia of History and Culture, 2009. Retrieved: 12 February 2013.
  2. 1 2 E. Thomas Wood (2009-02-27). "Dortch Oldham dies at 89". nashvillepost.com. Retrieved 2013-04-22.
  3. ↑ William P. Barrett, 12.01.97. "An American original". Forbes.com. Retrieved 2013-04-22.
  4. ↑ "Southwestern/Great American - Nashville, TN". Inc.com. Retrieved 2013-04-22.
  5. 1 2 3 4 5 6 7 BBB Review of Southwestern Company in Nashville, TN, Better Business Bureau
  6. ↑ Southwestern Advantage Reviews
  7. ↑ "Southwestern Advantage Questions & Answers". Southwestern. Retrieved 7/2/2013. Check date values in: |access-date= (help)
  8. ↑ Letter of Credit – The Southwestern Company
  9. ↑ 2011 Fact Sheet
  10. ↑ Is there any money up front?
  11. ↑ What about student safety?
  12. ↑ Living Arrangements/Where will they be going?
  13. ↑ "Southwestern Fact Sheet" (PDF).
  14. 1 2 Southwestern FAQs: What else do I need to know about the International Division?
  15. ↑ Company defends salesman who had license revoked
  16. ↑ Man arrested selling books door-to-door
  17. ↑ Bandera (TX) Bulletin, "An out-of-towner has come a'knockin"
  18. ↑ The Harvard Crimson: Book Company Recruiting Despite Ban By Harvard
  19. ↑ The Diamondback Southwestern Co. still banned from recruiting on campus
  20. ↑ Student keeps door-to-door sales alive
  21. ↑ Wisconsin: Father, group upset about sales bill
  22. ↑ Bill To Regulate Traveling Sales Crews Considered At Capitol
  23. ↑ Malinda's Traveling Sales Crew Protection Act Pounded By Out-Of-State Company
  24. ↑ Wisconsin Tightens Rules on Sales Crews
  25. ↑ Durham Students' Union - Policy - Southwestern Books Archived August 28, 2011, at the Wayback Machine.
  26. ↑ University of Birmingham - Guild Council Motion - Southwestern on our Campus Archived July 21, 2011, at the Wayback Machine.
  27. ↑ Southwestern Company banned from recruiting at UI, University of Idaho Argonaut Archived October 25, 2010, at the Wayback Machine.
  28. ↑ AGM attracts few, refuses to condemn Millbank violence
  29. ↑ "Representative Marsha Blackburn Biography - Project Vote Smart". Votesmart.org. Retrieved 2013-04-22.
  30. ↑ "Go Southwestern, Young Man | Opinion | The Harvard Crimson". Thecrimson.com. 1976-06-01. Retrieved 2013-04-22.
  31. ↑ "Several Famous People Held This Trying Summer Job". NPR. 2011-07-15. Retrieved 2013-04-22.
  32. ↑ Three Weeks in October: The Manhunt for the Serial Sniper - Charles Moose, Charles Fleming - Google Books. Books.google.com. Retrieved 2013-04-22.
  33. ↑ "Welcome Glacier Commercial". Glaciercommercial.com. 2003-11-10. Retrieved 2013-04-22.
  34. ↑ "Rick Perry Bible reference book salesman long before 'The Response' - Maggie Haberman". Politico.Com. Retrieved 2013-04-22.
  35. ↑ "40 under 40 2002 - Pages - Crain's Chicago Business". Chicagobusiness.com. 2002-10-30. Retrieved 2013-04-22.
  36. ↑ Chu, Kathy (2006-07-21). "College students learn from job of hard knocks". Usatoday.Com. Retrieved 2013-04-22.

External links

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