A distribution agreement describes the relationship between, and responsibilities of, a business who supplies or manufactures services or products, and a distributor who distributes those products. This will typically be within a specified territory, but could also be on a global basis.
It should benefit both parties to have this agreement put into place in order for the terms of their relationship to be clear and concise, and to avoid disputes from arising in the future. Such terms will typically include:
- Whether or not the distribution is on an exclusive or non-exclusive basis – are there any other businesses that are entitled to distribute the services or products? Are they, too, restricted to a certain territory so as to avoid competition with distributors in other territories?
- If products, how stock levels are managed. Will orders need to be placed on a regular basis and will there be minimum order levels that the distributor will need to meet?
- Typically distributors are to provide sales reports or similar in order to ensure the company has all relevant information concerning the purchase and consumption of their goods or products – what frequency should these be provided?
- Whether the distributor is permitted or required to advertise/promote the services or products, or whether they only use promotional material supplied (or approved) by the company.
- How queries and complaints made by customers (sometimes known as “end users”) will be handled.
- How will payment work and what the incentive is for the distributor to distribute the services or products.
- The duration of the agreement and how either party can terminate or extend it.
Regardless of whether you are a distributor or have engaged distributors yourself, it is crucial to make sure that any agreement you may have in place is legally sound and accurate as to the nature of your distribution activities. Here at BEB, we can work with you to both review and draft distribution agreements, as well as fulfil all your other contract needs! Get in touch with us today at 01604 217365 or info@bebconsultancy.co.uk.