Selling through distributors and resellers extends your reach without building your own sales operation in every market. The trade-off is control: your brand, your pricing and your customer relationships are now in someone else's hands. A good agreement keeps the reach while protecting what matters.
Decide whether the appointment is exclusive or non-exclusive, and define the territory precisely. Online sales need explicit treatment, because a distributor's website can reach well beyond its assigned territory. Spelling out what online activity is permitted avoids conflict between channel partners.
A distributor will use your brand, so the agreement should grant a controlled licence to do so, attach brand guidelines, and reserve your right to enforce them. It should also be clear that goodwill in the mark stays with you, and that the distributor must report infringements it encounters rather than acting alone. This links directly to our trademark licensing and brand monitoring and online enforcement work.
How far you can control a distributor's resale prices is limited by competition law. Under the EU rules on vertical agreements, imposing fixed or minimum resale prices is generally prohibited, while maximum or recommended prices are usually allowed. Territorial and customer restrictions are also constrained. These are real limits with real penalties, so pricing and restriction clauses should be drafted with the competition framework in mind.
Minimum purchase or sales targets keep an exclusive distributor active, with the right to convert exclusivity to non-exclusive, or terminate, if targets are missed. Termination rights and notice periods should be clear, and local agency or distribution protection laws in some countries can give distributors compensation rights on termination, which is worth checking before appointing in an unfamiliar market.
On termination, deal with remaining stock (sell-off period or buy-back), the return or destruction of branded materials, and the handling of customer data, which is governed by data protection law and addressed in our note on data retention.
Distribution agreements are part of our commercial contracts and transactions service. For background, see the map of commercial agreements and why every distribution agreement needs IP provisions. Drafting and review run through our Contract Studio and Clause Library and Risk Review technology.
You can set maximum or recommended prices, but fixing or imposing minimum resale prices is generally prohibited under EU competition law. Get pricing clauses reviewed, because the penalties for resale price maintenance are significant.
A distributor buys and resells in its own name and at its own risk. An agent sells in your name and is paid commission. They are treated very differently in law, including on termination compensation, so the agreement should be clear which one it is.
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