31/08/2012

Check your distribution agreement against this checklist.

The Product

1    Are the products specifically defined?
2    Does the definition include new versions, new models or upgrades?
3    How will the products be delivered and at whose cost?
4    Is the product fully tested?
5    Does the supplier warrant important aspects of the product?
6    Can the product be changed at the supplier’s request?
7    Does the distributor have to keep a minimum level of stock?
8    What on-going tech support will the supplier provide?
9    What are the arrangements for after-sales service?

Distribution Details

10    What territory does the distribution cover?
11    Is the territory exclusive?
12    Can the territory be changed by the supplier?
13    What is the term of the distribution agreement?
14    Is there an option to extend?
15    Is the term long enough to allow the distributor to amortise set up costs?
16    Can the distributor sell his business?
17    How can either party terminate the agreement?
18    Can the supplier terminate if the distributor fails to meet minimum sales levels?
19    Can the supplier guarantee supply?

Payment

20    Is there a payment required for the right to distribute the product?
21    What are the payment terms following a sale?
22    Who collects the payment from the customer?

Sales & Marketing

23    Does the product have an existing market?
24    Is the distributor building the market from scratch?
25    What market research is available?
26    Will the supplier provide marketing support and if so in what form?
27    Is the distributor required to spend a minimum amount on marketing?
28    What level of control over marketing does the supplier exercise?

If your distribution agreement doesn’t deal clearly with at least all these things, and the ramifications of them, then please contact TOWNSENDS BUSINESS & CORPORATE LAWYERS on (02) 8296 6222.