The termination provision is particularly important in the case of a termination agreement. The exact amount of termination before the termination comes into force must be clearly defined in the agreement. A manufacturer generally wants a short notice period. a much longer distributor. From the manufacturer`s point of view, if you set sales quotas or targets, be careful how you impose them. The general principles of law essentially say that actions speak louder than words. If you set high targets or quotas in distribution agreements, you should apply them consistently. Otherwise, if you later attempt to terminate a distribution place on the grounds that the distributor has not achieved its objectives, you will be faced with the argument that, since you have never achieved your goals before, you will have to achieve that specific goal against that special distributor for a malicious reason, z.B. as far as the resale price is concerned. Another question is whether the distribution agreement is indeed a franchise agreement. The TPA franchising code contains a very broad definition of the “franchise agreement.” It captures a number of transactions that have traditionally not been considered franchises. If your sales contract contains a marketing plan or business system and gives the distributor the right to operate with the supplier`s brand, it is a franchise agreement on its face. Failure to comply with the requirements of the franchising code is a violation of the TPA and renders the agreement unenforceable.
Distributor franchises may be exclusive, where there will be no other franchised distributor in the territory; or not exclusively if the new distributor could be one of the distributors of several franchisees in the territory. Distributors sometimes use exclusive territory to argue that, without an exclusive area, the distributor is not encouraged to provide adequate resources to the producer to develop sales. As soon as a vendor accepts an exclusive domain, it loses the ability to franchise an additional distributor for a certain period of time. The allocation of an exclusive distribution in an area is an unnecessary leap of confidence on the part of the supplier. An alternative to the allocation of exclusive territory is to design the distribution agreement so that the distributor is not exclusive, but is only a distributor. An oral agreement would indicate that if a supplier`s objectives were met, no additional distributors would be allowed into the non-exclusive territory. Such an agreement encourages the distributor to promote it without restricting the manufacturer`s options. The most serious situation is that the agreement absolutely prohibits the trader from selling outside a regulated area. For example, there could be an agreement that the distributor can only sell the products within the city of Cleveland, Ohio, and if the distributor sold products outside the city limits, the manufacturer would have the right to terminate the distributor. Third, if you are trying to sign a distribution agreement in a foreign country, use the foreign network. The U.S.
Chambers of Commerce are located in most countries of the world (American Chamber of Commerce in Hong Kong, American Chamber of Commerce in the Netherlands, American Chamber of Commerce in Egypt, etc.). If your foreign branch is not yet connected to the local Chamber of Commerce, launch it immediately.