What Is Exclusive Distribution Agreement

However, in the event of a dispute with your exclusive distributor, you risk losing the entire market. This exclusive distributor can have very good relationships in the local market, making it difficult for another distributor to build the same relationships. So, if there is a major dispute in the exclusive distribution, it means that huge losses can be incurred, not only in terms of money, but also in terms of lost time. The distribution of a product makes it possible to position it on the market and to communicate to consumers all the possible intangible properties of the product. Exclusive distribution agreements indicate that a product is in limited quantity and requires some expertise to sell it, like. B luxury cars or designer handbags, and is worth a higher price. Distributors also benefit from an exclusive distribution agreement that secures their territory against competition and provides them with a product that sells for its merits. Following General Motors` decision to discontinue the distribution of new vehicles in Western Europe for one of the group`s brands, the French importer of the brand in question informed its affiliated distributors on 11 December (…) Addiction – Whether your brand is new or not as popular as a Rolex or BMW, you`ll find that there`s a dependency on the exclusive dealership. Brands like Rolex and BMW can sell, regardless of the type of dealer that sells them.

In addition, well-known brands have a number of distributors who are willing to connect with the company. However, unknown brands become very dependent on their exclusive distributors and have to do what the distributor recommends. Many high-end products derive their value more from their brand than from the hardware parts from which they were made. The protection of this trademark is crucial for companies that own such products. Exclusive distribution agreements allow the supplier to maintain a high degree of control over how the product is marketed, marketed and branded by the distributor. The terms of an agreement could create a principal-agent relationship between the supplier and the distributor – exposing the supplier to liability arising from the distributor`s actions – depending on the degree of freedom the distributor has in its activities. Suppliers can enter into exclusive distribution agreements to preserve the aura of exclusivity of their brand. For example, Lamborghini is aware that dealers in a certain region will reduce the prestige associated with its brand. It can use an exclusive distributor to ensure that it has one or two well-placed dealers in the area, controls the range of vehicles available and ensures that Lamborghini showrooms and lots do not become ubiquitous throughout the region. Examples of companies using exclusive distribution – Samsung, Apple, Gucci, Lamborghini, Mercedes, BMW, etc. The use of exclusive distributors is also used in the field of industrial machinery. Often, exclusive distribution is assigned to dealers who are efficient sales units and effectively relate to the local market.

These distributors are usually able to focus more on selling the brand than the company`s competitors. One of the latest cases to emerge from the European Commission`s investigation into the e-commerce sector has come to a conclusion. On the 20th. In January 2021, the Directorate General of Competition imposed fines on Valve Corporation, owner of the Steam game distribution platform, and five PC video games (…) The health crisis and its consequences have had a direct impact on the trade agreements that had just been signed for 2020 between traders and the food companies that supply them. This situation has led suppliers to reflect on the different legal mechanisms that (…) Exclusive distribution: In an exclusive distribution agreement, the supplier undertakes to sell its products to only one reseller for resale in a specific territory. At the same time, the distributor is usually limited in its active sales to other territories (exclusively allocated). Possible competitive risks are, in particular, less intra-brand competition and market sharing, which may facilitate price discrimination in particular. If most or all suppliers use exclusive distribution, this can weaken competition and facilitate collusion at both the supplier and distributor levels. Finally, exclusive distribution may lead to the exclusion of other distributors and thus reduce competition at this level.

Suppose Rolex needs a distributor in a specific region. Rolex is aware that showrooms in this region will reduce the value of the brand (the prestige associated with its brand). Therefore, Rolex will receive an exclusive distributor for the aforementioned region. The exclusive distributor then establishes its own exclusive Rolex distribution centres and also sells the Rolex watches through the sales centres in the region`s elite districts. Exclusive distribution is an agreement between a distributor and a manufacturer under which the manufacturer does not sell the product to third parties and only sells it to the exclusive distributor. At the same time, the exclusive distributor must also accept that it sells only the products of manufacturers exclusively and not those of the competition. In this way, the market is an open ground for the manufacturer and distributor and they have full control over the distribution of the product. Distributors and manufacturers often enter into exclusive distribution agreements with great hope. The manufacturer hopes the deal will encourage distributors to promote the manufacturer`s products with more enthusiasm.

Distributors have the possibility to own their own territory without competition from others. Exclusive territories free distributors from price competition and other sales entities that might otherwise enter their territory. A similar pattern is observed in many different industries. Even in the industrial machinery segment, exclusive distribution is often granted to dealers who can sell well and have good relationships in the local market and can focus on selling the brand more than competitors. Distribution agreements are an excellent tool to strengthen the business relationship between a distributor and a supplier. It is important that companies have a well-written agreement that defines the exact terms of the order. A poorly written agreement can lead to costly and lengthy litigation that affects the business relationship of both parties. Talk to an experienced business lawyer today if you`d like to explore a distribution agreement – exclusive or otherwise – for your business. An exclusive distribution agreement is sometimes referred to as a single distribution agreement.

However, this can be misleading, as the granting of exclusive distribution rights may mean that the supplier retains the right to personally distribute products in the protected territory, while renouncing only the possibility of entrusting the sale to third parties on that marketplace. Nicolas Feuillatte Champagne and two importers-distributors Fines for maintaining exclusive import agreements in the French West Indies* Background According to a report by the French Directorate-General for Competition Policy, Consumer Affairs and the Fight against Fraud (DGCCRF), the French Authority (…) On November 5, 2019, Novo Nordisk Sağlık Ürünleri Ticaret Ltd. Şti. (`Novo Nordisk`) has applied to the Turkish Competition Authority (`the Authority`) for negative clearance or an individual exemption for a subcontract with Abdi İbrahim İlaç San. ve Tic. A.Ş. (“Abdi İbrahim”), (…) Localization – One of the main advantages of exclusive distribution is localization. When a company enters a foreign country, there are many things that the company will not know. .

Please follow and like us: