10 Questions to Ask When Drafting Distribution Agreements

Drafting a distribution agreement is a pivotal step in establishing a successful business partnership. Whether you are a manufacturer looking to expand your market reach or a distributor seeking reliable suppliers, a well-crafted distribution agreement is crucial for defining the terms of your collaboration. To ensure clarity, fairness, and legal protection for all parties involved, it’s imperative to ask the right questions during the drafting process. This article explores 10 essential questions that should be carefully considered and addressed to create a robust distribution agreement that lays the foundation for a mutually beneficial and sustainable business relationship. From defining territories to protecting IPRs and addressing warranty clauses, each question plays a critical role in shaping an agreement that aligns with the interests and expectations of both distributors and suppliers. Let’s delve into these key inquiries to guide you through the intricacies of drafting a comprehensive and effective distribution agreement.

  1. In which country will the distributor be authorized to distribute the goods? What is the general category of the products?
  2. Have the trademarks been registered in the territory?
  3. Will the distributor have exclusive or non-exclusive rights to distribute the products in the territory?
  4. Will the distributor be required to maintain certain minimum levels of inventory of the products?
  5. Will the distributor be permitted to appoint sub-distributors in the territory?
  6. Do the products require installation? If so, who will be responsible for installation?
  7. Will after-sales support be required? If so, who will be responsible for after-sale support? Will the suppplier provide training to the distributor on repair and maintenance of the products? Where will the training take place and who will be responsible for the training expenses?
  8. Will the distributor be permitted to manufacture, market or sell products that compete with the supplier’s products?
  9. What payment terms will apply?
  10. What will be the warranty period?

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