Successfully entering new markets with distributors

A distributor helps you enter a new market by acting as an intermediary close to the end customer — without you having to invest significant time and resources yourself. The basis for a successful partnership is a legally sound distribution agreement, with clear agreements regarding products, region, prices, and notice periods. Below, you can read how distribution works, what should be included in the agreement, and the difference compared to a sales agent.

A distributor as a solution for market entry

If you want to enter a new market and expand your sales area, you will face challenges: you want to be close to the end customer, but you must also take local regulations and competition into account. A distributor can offer a solution by acting as an intermediary between you and the end customer. This gives you quick and efficient access to new customers and markets, without having to invest heavily yourself. Distribution is particularly interesting for high-value, complex products.

What is stated in a distribution agreement?

It is important to be aware of the legal aspects of a distribution agreement. A well-drafted, watertight agreement prevents ambiguities and conflicts. In any case, include:

• which products are distributed;
• in which region the distributor is active;
• the terms of sale, terms of delivery and prices;
• the other conditions under which the deliveries take place;
• the duration of the agreement and the notice periods and options;
• the tasks, responsibilities, and compensation of both parties.

TODO_VERIFY: competition law rules may also apply to distribution (for example, regarding exclusivity and price agreements) — have your agreement reviewed in this regard.

Distributor or sales agent?

A distribution agreement is not the only way to enter a new market. A commercial agent can also act as an intermediary. The difference is substantial:

• a distributor purchases the products himself and resells them for his own account and risk;
• A commercial agent acts as an intermediary on your behalf and generally does not conclude sales agreements of their own.

Read more about the differences between a distributor, dealer/reseller, and sales agent. Which form suits you best depends on your business and the target market.

Frequently Asked Questions

What exactly does a distributor do?

A distributor purchases your products and resells them to end customers in a specific region for their own account and risk. This allows you to quickly enter a new market.

What is the difference between a distributor and a sales agent?

A distributor acts for their own account and risk; a commercial agent acts as an intermediary on your behalf. The legal consequences differ significantly, particularly in the event of termination.

What are the minimum requirements for a distribution agreement?

The products, the region, the prices and terms of sale and delivery, the duration and cancellation options, and the responsibilities of both parties.

Do competition rules apply to distribution?

This is possible, for example regarding exclusivity, territorial protection, and price agreements. Have your agreement reviewed for this to prevent risks.

Have a distribution agreement drawn up?

Properly managing the legal aspects of distribution is essential for a successful collaboration. We draft a clear, watertight distribution agreement and advise you on the best form for your situation.

View our expertise in distribution law or schedule a no-obligation intake meeting.