Sunday, November 4, 2012

Distributor/Dealer Agreement Checklist

 If Distributor is a company, will anybody personally guarantee performance?

Will the appointment be exclusive or non-exclusive within a particular Territory? A good strategy might be to grant exclusivity within the Territory but only if the Distributor will sell at least $X of product within a certain period of time. Otherwise, the company may revoke Distributor's exclusivity and appoint other distributors within the Territory.  

Will Distributor be allowed to sell competing products?

Modification of products, improvements, bundling.

Minimum Advertised Price?

Term. Can Distributor be terminated for any reason or no cause?

Confidentiality and Non-Compete obligations to survive for X years after the termination of distributorship.

Audit: Must Distributor make its books available to Supplier for inspection?

Relationship of the parties: independent contractors, nobody is responsible for the other party's taxes, benefits and responsibilities.

Distributor’s obligations: Advertising efforts? Customer Service? Insurance, permits, licenses, compliance with local laws, accounting, regular reporting.

Supplier’s obligations: Sales leads, samples, advertising, training, support, honoring warranty and returns obligations.

Terms of payment, discounts, late fee.

Shipping, allocation of risk of loss upon shipment, drop shipping directly to Distributor’s clients, export/import regulatory compliance.

Warranty or disclaimer of warranties.
IP: Is Distributor allowed to use Supplier’s name?

Force majeure.

Indemnification: party must be reimbursed for damages resulting from the other party’s negligence.