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SAAB Dynamics AB
2019-10-09 08:53:37

Transparency in Distributor Agreements

I'm currently working on a Distributor Agreement and the distributor is prompting for exclusivity in the country which they will be working in. We don't want to give them exclusivity (corporate decision). The distributor wants some kind of writing in the agreement which can assure them that we won't be looking for other distributors in the conutry and that we will have an open and transparent dialogue regarding business opportunities.
Anyone who has an idea of a good transparency clause to include in the agreement?
Any input and other ideas are highly appreciated!
 
 •  Eaton Aerospace LLC  •   2019-10-29 20:08:14
Hello Lamija, I have encountered this situation numerous times (in an industry other than the one I am in currently). My approach to this, usually with success, was to define a clause wherein the distributor is given a very clear revenue/sales goal for a defined period of time (say, 6 months to one year) during which we would not grant exclusivity, nor would we actively seek another distributor. If the distributor met the clearly defined objectives, we would then negotiate an exclusive arrangement. Many factors contribute to this scenario, however, such as the relative size of the market, the number (or lack) of distributors in the sector, the risk associated with "betting" on a single player, cultural social/considerations, etc.

In short, exclusivity based on proven performance. I hope that proves helpful.
 
 
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