An exclusive distribution agreement defines the territory or markets in which the contract is applicable, as well as the understanding of the products for sale and the associated language for advertising or online offers. The agreement should include margin and return rules for both distributor and manufacturer, as well as all expectations for financial or support support on both sides. Some international distribution agreements contain exclusivity clauses. While not all of these agreements are exclusive, this is an issue that should be addressed in the treaty negotiations. A merchant agreement generally defines the terms of sale of products purchased by the distributor, the expected obligations and responsibilities of the distributor, and the circumstances under which the contract may be terminated. A merchant contract can also determine the means of payment, the date of delivery and the extent of the merchant`s territorial rights. If your company is considering an international distribution agreement, it is important that you take professional advice. An exclusive distribution agreement is similar, unless an exclusive distributor becomes the only point of sale of these products in the territory. The manufacturer will not sell the products on its own and will not use other distributors. At the other end of the scale, a selective distribution agreement limits a business to a small collection of distributors used in a region and a non-exclusive distribution agreement does not limit any restrictions on the distribution and distribution of both parties. All of this has its own business advantages and disadvantages. Suppliers who use channel partners as part of their distribution network can use a one- or two-step distribution channel. In a one-step distribution system, the provider develops relationships with channel companies such as VARs, System Integrators (SIs) and Managed Service Providers (MSPs) — which sell to end customers.
In a two-tier system, the supplier sells products to an independent distributor who in turn supplies products to channel partners who then package solutions for end customers.