Contents
Whether you’re a manufacturer or a distributor, a Distribution Agreement is important to make sure the terms of your arrangement are clear to both parties.
Manufacturers usually engage distributors to sell and market their products at the wholesale or retail level.
Using distributors is a useful and easy way of getting your products into stores and establishing your brand with customers.
What’s In A Distribution Agreement?
A Distribution Agreement would usually include clauses about:
- Territory: this is the area in which the distributor may sell the goods or services
- Term: this is the length of time for which the agreement will run
- Payment terms: the manner and time in which the distributor must pay for the goods or services
- Subcontracting: whether or not the distributor can appoint other businesses to distribute the goods or services within their territory
- Exclusivity: whether the distributor can sell competing products
- Renewal: whether the agreement can be renewed or extended and the costs associated with this
- Termination: how the agreement can be terminated
Marketing And Training
Some provisions that are specific to Distribution Agreements relate to marketing and training.
Having a distributor market the products is advantageous for manufacturing businesses. It allows the manufacturer to focus on creating the products while being able to dictate the terms under which distributors can market their products.
The manufacturer could get distributors to use specific assets when marketing the product, or follow particular guidelines in accordance with their brand strategy.
The manufacturer can also get their distributors to participate in training in order to provide support for the products. This is particularly the case for more technical products.
At times, distributors may be featured in promotional material for the product, in which case, it is important that they are aware of the product’s functions and are able to provide support.
Example
Holly has a distribution company that sells different types of skin care products. She feels like she doesn’t have expertise to make face masks for her business.
She engages a manufacturer, Mark, who makes different types of face masks with organic products.
Mark is thrilled that there is a way for him to sell his face masks without spending resources and time on marketing.
He gets a Distribution Agreement drafted to make sure that his arrangement with Holly is reflected in writing.
It’s important to him that Holly only markets his face masks on her website, so he inserts an exclusivity clause in their agreement.
Need Help?
Whether you’re a manufacturer or a distributor, it is important to have a Distribution Agreement to make sure that your products are sold in an efficient and timely manner.
It can seem like a daunting task, but Sprintlaw has helped many businesses bring their business goals and products to life. Get in touch with us at team@sprintlaw.com.au to find out more!
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