Here are the steps to find and negotiate a distribution agreement: Step 1: Meet with the distributor. Step 2: Discuss the terms of distribution. Step 3: Review the details, such as marketing materials, catalogs, or product literature. Step 4: Hire a lawyer or an expert to draft the agreement.
The term for Distribution Agreements varies, with terms being anywhere from 5 to 15 years. I try to limit the term as much as possible—especially when there is no advance, or a meager one.
Permission vs. Ownership: A licensing agreement grants the licensee permission to use or sell the licensed product. In contrast, a distribution agreement allows the distributor to sell and distribute the supplier's product as their own.
Distribution agreements often include terms about termination conditions, allowing either party to exit the contract under specified circumstances. These contracts can also address intellectual property rights, ensuring that distributors understand how to handle branding and proprietary information.
Agent are responsible for finding the target people and negotiating with them to buy the products. Distributors do not have any role in negotiating with customers; they only perform the role of distributing the product in the market. Think in the following terms: Agent = Representative.
A distribution agreement, also known as a distributor agreement, is a contract between a supplying company with products to sell and another company that markets and sells the products. The distributor agrees to buy products from the supplier company and sell them to clients within certain geographical areas.
Essentially, the difference is one of product ownership. While a commission/sales/trade agent sells product on your behalf that you continue to own and invoice the ultimate customer for, distributors take ownership of the product and sell on to their own customers.
Agency and reseller agreements are both a kind of legal contract but there are several key differences to note. Under an agency agreement, on behalf of the principal, the agent enters into a contract with the customer. Whereas, under a reseller agreement, the contract is between the reseller and the customer.