The exclusive distribution agreement is an essential document for any company that is appointing an exclusive distributor for the products and services. The company can use it for selling goods of any type in the home country or abroad. Simply, this is a special agreement where suppliers and distributors enter into an exclusive agreement that only allows the named distributor to sell a specific product.
Exclusive distribution agreements are sometimes called “sole distribution agreements”. However, this can be misleading: a grant of sole distribution rights is sometimes taken to mean that the supplier retains the right to distribute the products in the territory, albeit forfeiting the right to appoint any third parties to do so.
An exclusive distribution agreement is comparatively free of regulation. You can make the deal you want. Here we have provided some essentials of the distributor agreement to provide an armory of ideas in plain English. You can be tough or tender.
Whether you are the distributor or the merchant, there will be many areas where you would like the other of you to do things your way. As a result, there will be a lot to negotiate. By setting everything down in a document before you start to talk, you have a head start. The agenda is yours.
Elements of Exclusive Distribution Agreement
- Setting up the agreement
- Appointment of distributor
- Obligations of each party
- Compliance and regulation
- Products recall
- Minimum sale requirements
- Distributor’s marketing obligations
- Distributor’s liaison and reports
- The Price, orders, and acceptance
- Delivery and transportation
- Payment terms, including payment on running credit account and payment by letter of credit
- Risk and retention of title
- Products defective or not as ordered
- Warranty and service policy
- Disclaimers and limitation of liability
- Mutual indemnities
- Assignment and change of control
- Confidential information
- Intellectual property
- Duration and termination
- Other important legal provisions
- Options for six schedules if you need
Business Terms in Exclusive Distribution Agreement
- Exclusive Right
- Prohibition of sale outside Territory
An exclusive Distribution Agreement governs the relationship between a manufacturing firm, the sole selling agent of a company. It is the common feature of the manufacturing operations of the industrial concerns that distributors or resellers are appointed to sell the manufactured goods. It is because of this that the Exclusive Distribution Agreement is invariably considered as an integral element to demarcate the contours of relations.
- If users need personalized service, you can utilize a local dealer network or reseller program to provide that service.
- If your users prefer to buy online, you can create an e-commerce website and fulfillment system and sell direct; you can also sell to another online retailer or distributor that can offer your product on their own sites.
- You can build your own specialized sales team to prospect and close deals directly with customers.
Related: How To Setup An eCommerce Shop
In many cases, the exclusive distribution agreement plays a vital role in business administration. It must be prepared carefully to avoid future inconvenience from both sides.
Editorial Staff at NextWhatBusiness is a team of Business Consultants having years of experience in small and medium scale businesses.