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A distribution agreement, also known as a distributor agreement, is a contract between a supplying company with products to sell and another company that markets and sells the products. The distributor agrees to buy products from the supplier company and sell them to clients within certain geographical areas.
Signing a distribution agreement with a local distributor in the United States of America is one of the most common ways for foreign companies to enter the American market. It is also a great way to test whether a product can be marketed in the United States, without taking too many risks.
Distribution agreements define the terms and conditions under which a distributor may sell products provided by a supplier. Such an agreement may be for a limited term, and be further restricted by territory and distribution channel.
How Distribution Agreements WorkSet an appointment with the manufacturer.Negotiate the distribution terms.Review specifics, such as promotional literature.Hire a business lawyer to help you draft the terms.Sign or renegotiate the contract.Begin executing the agreement as contained within provisions.
Territory: The agreement should specifically define the area in which the distributor is permitted to sell and promote the products. b. Products: The agreement should specify what products, product lines, or brands are included under the agreement.