If you are interested in becoming a sole distributor for a particular company, you want to make certain that you have in place an appropriately drafted agreement. At the heart of becoming a sole distributor is the contract that you enter into with the company that is offering you an opportunity. By being proactive in this regard, your interests as a sole distributor will be protected.
Negotiate the geographic boundaries that will be set aside for your sole distributorship. You will want to have the largest geographic area the company will offer (that you reasonably can manage).
Determine the initial term in which the sole distributorship will remain in place. Generally speaking a longer term works to your benefit.
Reach agreement with the company on the manner in which your sole distributorship can be extended after the end of the initial term.
Develop an exit strategy in your agreement to be a sole distributor in the event that you have a legitimate reason to terminate relationship.
Include a narrowly drafted non-compete clause. In other words, the company likely will insist on a non-compete clause. Keep it as short in time and as focused in territory as possible.
- Commercial Law, Robert Bradgate & Fidelma White, 2007
- The Franchise Handbook: A Complete Guide to All Aspects of Buying Selling or Investing in a Franchise, Robert Hayes, 2006