Distributor or distribution agreement is a legal document between the distribution channel partners. It includes the important terms of service and other issues. This agreement specifies the duties and rewards of both of the parties included in the agreement. This type of agreements is often observed between the manufacturer and the retailer about the circulation of a product in a specific area. It can be between a manufacturer and a distributor or a group of distributors that are part of the distribution channel. It must include the time period, terms and conditions and sales area to be covered by the distributor.
There are two types of distributor agreement:
- Exclusive agreement
- Non-exclusive agreement
The exclusive agreement specifies the distributor mentioned in the agreement as the sole distributor for the product sale in a specified region or over multiple regions clearly mentioned in the agreement. On the other hand, if the agreement is non-exclusive it allows the manufacturer or merchant to make supplies to other persons in the area.
In the agreement distribution strategies must also be included to cover the target market. An incentive strategy is much helpful to bring the product in the front line in the market. The agreements must be made and signed vigilantly because any carelessness can cause harm to your goodwill in the market.
Here are a few mistakes that must be avoided while having a distributor agreement.
- Do not be very fast in the signing of agreements with many distributors. Firstly, make a courtship with the selective distributor and assign a clear jurisdiction to him.
- Include the termination cases in agreement. Termination for cause and convenience is one of the best practices.
- The agreement must not be open to frequent changes but limits must be set for once or twice for making changes. It will increase the life of agreement for both parties.
Create your own exclusive distributor agreement by using the following template,