Agency and Distribution Agreements

When running a business, it can often be useful to forge relationships with others who can help get your product to market or to procedure orders for your goods and services. This can be done in a number of ways, including through the appointment of a commercial agent or via entering a distribution agreement.

At IMD Solicitors, our commercial solutions team have a wealth of experience in drafting contracts for each type of arrangement, both here in the UK and abroad.

When might an agency or distribution arrangement be useful?

There are many circumstances in which an agency or distribution arrangement may be helpful to your business operations and ambitions for growth, including where you want to enter a foreign market and would find it useful to have a representative on the ground or where you need to increase the size and geographic reach of your sales team but do not have the resources to take on additional personnel.

Agency or distribution — what is the difference?

Under an agency arrangement, your appointed representative is engaged to do one thing and that is to secure you contracts. Once the contract has been agreed, the agent steps out of the picture and is left to you to deliver what has been promised.

This is in contrast to a distribution arrangement, under which your representative agrees to buy in what you produce and to then sell it on to their own customers with no further involvement expected from you.

In most cases, an agency arrangement is best suited to businesses who sell high-value, bespoke goods or who provide services that need to be personally delivered and a distribution arrangement is best suited to businesses who sell low-value, commoditized products in which no service element is required.

How can we help?

By drawing on our experience of working with a variety of organisations across a diverse range of sectors, including entertainment, IT and construction, our commercial contracts lawyers can help you to:

• consider the pros and cons of agency and distribution arrangements in order to decide where either are a good fit for your business needs and ambitions;
• explore alternative options, such as joint ventures, franchising or outsourcing arrangements and how these stack up when you take account of employment law considerations and the TUPE regulations;
• access whether it is in your interests to agree to any exclusivity rights over a particular geographic area or part of your product offering;
• carry out legal due dilligence to ensure your proposed business partner is capable and trustworthy; and
• negotiate terms for any proposed deal and draft the resultant agreement.

We can also help you to review existing arrangements to ensure they remain fit for purpose and assist you with the appointment of further agents or distributors in the event you find one or both of these models work well for you.