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Expand Your Sales Territory With International Distributor Relationships

By: Admin In: Sales & Marketing Last Updated: 2011-05-09

The best way for business expansion is to reach out to global clients through widespread distribution channels. But as the geographical boundaries become flexible, certain regulations are also required to keep the process flow smooth. That is why; an International Distribution Agreement has been formed for sales and supply contract within a set time-period to ensure that both the parties involved in it remain in a win-win partnership and enjoy the benefits. The International Distribution Agreement sets up the terms of distribution for various aspects and must be formalized properly in writing for implementation. This write-up discusses the terms and aspects covered by such an agreement.

International Distribution Agreement: What It Covers

  • Price
  • Goods
  • Delivery
  • Insurance
  • Warranties
  • Mode and method of payment
  • Risk
  • Addresses the concerns for commission payment and return in case the product is damaged/under warranty

An Agreement Should Formally State The Following:

  • The business relationship between the concerned parties and the execution as well as the maintenance of such an agreement. The relationship could be a one-time event or continued on a short and long-term basis.
  • Details regarding protection of sale of goods in international territory. This could be regarding instability of political or economical issues such as currency fluctuations.
  • Authority of Intermediate agent. In many cases, the distributor may have to contact the supplier for certain deals and independently deal in other cases. But this set up must be clearly conveyed in time to the third party.
  • The distribution territory and the activities of the distributor and producer in clear terms. This may include the promotion, advertising, discount as per volume, producer and distributor incentives etc.
  • Terms as per the existing laws of the country. Many countries do not allow the representation of the supplier by the distributors wherein the prices are set by the seller. The distributor can also set the price and compensate it but for both the situations, the provisions must be stated clearly in the agreement.

The formation of such an International Distribution Agreement is very beneficial for all the parties but the task does not end here itself. As the sphere of business keeps changing, so the agreement should also be reviewed regularly for changes.

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