Distribution Agreements: What you need to know
A distribution agreement is a contract made between the manufacturer of a product and the person or company who distributes and sells the product. The distributor will generally sell the product to a third party, a dealer, who will then sell the product to the final consumer. In simple terms, the distributor is the “middle man” between the manufacturer and the retailer.
Application for small business people
Small business people may find themselves in the position of distributor, or they may need to deal with one or many distributors in order to run their businesses efficiently.
The distributor should be very well acquainted with the product and the manufacturers business before entering into a distribution agreement. The distributor needs to be aware of the target market, value and competition for the product. The distributor will generally also be interested in understanding the strength of the manufacturers business, whether it is well run and likely to continue to operate into the future.
Manufacturers should also ensure that they trust the distributor and are comfortable with the terms of the agreement. Ultimately, the distributor will be representing the manufacturer’s product and brand in the marketplace so having a distributor who is trustworthy, reliable and with strong sales abilities can make a big difference for the success of the manufacturers business.
6 key things to consider
As with all other legal agreements, there are several important issues that you must consider before entering into a distribution agreement. These include:
- Whether it is exclusive? Does the distributor have the sole rights to distribute the product, or will there be other distributors?
- If there are other distributors, will there be any geographical or other limitations to reduce competition?
- What is the dispute resolution process for any conflict arising from the agreement?
- What are the manufacturer’s responsibilities in terms of the quality, quantity and delivery of the products? Will there be a warranty?
- What are the payment terms?
- What is the term of the agreement and what happens when the term expires?
Want my view on your own situation?
Book an initial consultation: up to two hours with me by phone for a fixed fee of $1,650 (including GST), then a short written note of my advice and next steps. If my conflict check means I can't act, I'll refund your fee in full. To check anything first, email
info@klaw.com.auor call
(07) 3103 3199.
Joe Kafrouni, Accredited Specialist in Business Law, Kafrouni Law
Disclaimer: This article is general information only and is not legal advice. Before acting on it, get advice on your own circumstances. To the extent the law allows, Kafrouni Law accepts no liability for any loss arising from reliance on it. This article is the copyright of Kafrouni Law.
What People Say
Book an initial consultation
An initial consultation is the best way for us to find out whether, and how, I can help. It suits business owners and directors facing a decision that matters. You get my considered view of your situation, not just a first impression.
The fee is a fixed $1,650 (including GST). It covers a phone consultation of up to two hours, plus up to one hour of my time to consider the material you send me beforehand and to prepare my written note afterwards. Here is how it works:
1. When you book, you tell me briefly what the matter is about and who else is involved, so I can carry out a conflict check and confirm I’m free to act. If I can’t act for you, I’ll refund your fee in full.
2. I tell you what information and documents I’d like to see, and I consider them before we speak.
3. We talk it through by phone. I give you my initial advice, the options I see and what I’d do in your shoes.
4. Afterwards, I send you a short written note of my advice and the next steps I recommend.
If I can help further, I’ll explain how. If I can’t, I’ll say so. You are under no obligation to engage me further. If your matter needs more than this, I’ll send you a proposal setting out how I can help and an estimate of my fees. No further work starts until you accept it.
I keep only a limited number of consultation times. If none suits you, or you’d like to check anything before booking, email info@klaw.com.au and I’ll do my best to accommodate you.