Why Every Business Needs a Distribution Agreement

Distribution agreements make it possible for manufacturers and suppliers to relate well with their distributors. Distributors act as the bridge between manufacturers of products and their consumers. A distributor can either sell the goods to consumers at a marked up price or they can get a commission for processing orders made by customers.

To ensure that the relationship you have with your distributor remains cordial and beneficial, you need to have a good distribution agreement that clearly outlines the obligations between both parties.

Why Use A Distribution Agreement?

The relationship between distributors and manufacturers can be best said to be symbiotic. With a distributor, you don’t need to worry about logistics like the sale of your products. On the other hand, the distributor gets a product to sell without having to worry about production, research and development.

For this symbiotic arrangement to continue without glitches, you and the distributor need to have a contract that will protect the interest of both parties. This is where the importance of a good distribution agreement comes to fore.

What Are Distribution Agreements?

A distribution agreement is a legal document that defines the relationship that exists between you and your distributor. It deals with things like supply requirements, scheduling, returns, inspection requirements, and some other terms and conditions that define your relationship.

What Issues Should Be Included In My Distribution Agreement?

A distribution agreement can either be exclusive or non-exclusive. If it is exclusive, it means that the distributor has control over the product line, sales channel, and territory. In return, the supplier gets to outline performance obligations the distributor has to meet.

In your distribution agreement, you should cover issues like:

• The terms of the contract
• The territory of operation
• Marketing rights
• Reporting obligations
• Terms and conditions of sale
• Defects and return credits
• Trademark licensing
• Whether the distributor can represent competing products
• The conditions for the termination of your agreement

How Can I Write A Good Distribution Agreement?

If you want to create a good distribution agreement, it has to take care of things like the method of payment, where to distribute products, the rights and responsibilities of the parties, and so on. You should also make sure that the agreement does not break the competition laws of Florida.