Product Distribution / Dealer Agreement

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A manufacturer of a goods and products often enters into an agreement with a local business to become a distributor or dealer to distribute and sell their product in the local market. If you are a distributor and are thinking of becoming a distributor or dealer of a product from a manufacturer, you should enter into a distribution agreement. A distribution agreement will deal with several legal issues such as the following:

• the name of the manufacturer and the distributor
• the territory covered - will the territory be defined by geography such as a city or province, or by media such as retail, or online)
• exclusivity rights – does the distributor have exclusive rights or will other distributors be allowed in the same territory
• what is the time period (term) of the distribution rights – is there an initial period, and is there automatic renewal/extension of the term
• what products are covered by the distribution
• how will the products be supplied by the manufacturer
• what are the prices and payment terms
• what marketing will be involved (will the distributor be required to do its own advertising and marketing? Or will the manufacturer provide materials?)
• confidentiality of methods of doing business
• non-competition – will the distributor be allowed to distribute products from competitiors?
• who will deal with warranty claims from customers?
• other issues of concern between the parties to the agreement

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