Manufacturers routinely work with distributors and sales agents. These third-parties are often essential for capturing extensive parts of the market. When planned carefully, these relationships can last for years or decades or even evolve into joint ventures. Because of the large volume of business involved as well as the longevity of the relationships, much is to be gained… or lost. The level of exclusivity is a critical factor as well as the term. The minimum sales a distributor must meet in order for the relationship to stay in place must be considered as well since a manufacturer would not want to be restricted by an agreement that is failing to produce sales.
The geographic scope of the relationship must be considered. The liability of both the manufacturer and the distributor in a situation where a buyer complains is a factor. The representations a distributor can and cannot make about the product to buyers is critical. The extent to which the distributor can use the trademarks of the manufacturer must be established. A manufacturer must determine the extent of buyer information it requires of its distributors on an ongoing basis.
The foregoing are a few of the reasons agreements such as distribution agreements require careful analysis and drafting.