A distribution agreement template is a business contract usually conducted between a company, firm, or organization and a distributor agency, firm or company. In this agreement, a company allows a distributor to sell their products under a fixed or variable settlement, either for a fixed period of time or for a temporary time frame. Normally, the company gets the advantage of their products being sold without them having to worry about selling the products. Whereas, the distributor gets their commission and also a percentage from the amount of money gained from the sale. All these aspects are properly written down and explained in the agreement. The purpose of this agreement is to ensure that the distributor becomes aware of their rights and responsibilities in the deal.
Types of Distribution Agreements
Generally, there are two different types of distribution agreements.
• Exclusive Distribution Agreement: This agreement means that there is one distributor assigned for a specific area. This means that there will be one distributor that will deal with all the costumers in one region. So, the company will hire different distributors to carry out the trade for them in different areas. This way the company manages to sell its products to a wide range of costumers.
• Non-exclusive Distribution Agreement: However, in a non-exclusive distribution agreement, the company hires different distributors to sell their products in the same area or region. This means that there will be a number of distributors working for the same company in the same area. This way the company benefits by selling out more products in the same region and targeting more costumers. This approach is effective in areas where there is a targeted audience present.
Elements of Distribution Agreements
The distribution agreement template is composed by the manufacturing party; they provide it to the distributing party when the deal is being confirmed. The agreement is composed of the rules and regulations, conditions, rights and prohibitions of the contract. It has a basic format which is briefly explained below:
1. The date on which the agreement is being initiated.
2. Name and introduction to both the parties, their addresses and contact information.
3. The type and purpose of distribution agreement (exclusive or non-exclusive).
4. Contents of the contract, which include that the manufacturing company is agreeing to allow the distributor to sell their products under their own name. this includes the products they have to sell, and the amount product they have to sale out within a specified time period. basically, it sets the rules straight for the distributor.
5. The area or region that the distributor will be assigned.
6. The amount of payment the distributor will receive monthly for carrying out the trade on the company’s behalf and if the distributor will also get extra commission.
7. Transaction details and how the money will be processed.
8. The security of confidential information about that contract. This basically tells the distributor if they are allowed to disclose the information about this deal with any third party or no.
9. The date on which the agreement will expire, the both parties will no longer be expected to do anything for each other until the renewal of the agreement.
10. The signature of both parties to finally seal the deal.
Distribution Agreement Template
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