Distribution and reseller agreements are two popular legal contracts that companies use to expand their reach and increase sales. While both agreements involve the sale and distribution of products, there are key differences between them. In this article, we’ll take a closer look at the differences between distribution and reseller agreements to help you determine which is right for your business.
Distribution Agreement
A distribution agreement is a legal contract between a manufacturer or supplier and a distributor that outlines the terms and conditions of how the supplier’s products will be sold and distributed. In this agreement, the distributor purchases a set quantity of the product from the supplier and then sells it to its customers, typically at a markup.
The key features of a distribution agreement include:
– The distributor is responsible for selling the supplier’s products in a specific territory or market.
– The supplier retains control over the pricing and marketing of the product.
– The distributor is not typically authorized to modify or alter the product.
– The supplier may provide support to the distributor, such as training, advertising, and promotional materials.
– The distributor may be required to meet certain sales quotas or purchase minimums.
Reseller Agreement
A reseller agreement is a legal contract between a supplier and a reseller that allows the reseller to purchase and sell the supplier’s products to its customers. In this agreement, the reseller purchases the product from the supplier at a discounted rate and then resells it to its customers at a markup.
The key features of a reseller agreement include:
– The reseller is authorized to purchase the supplier’s products at a discounted rate and then resell them to its customers.
– The reseller typically has more control over the pricing, marketing, and branding of the product.
– The reseller may be authorized to modify or alter the product.
– The supplier may provide support to the reseller, such as training, technical assistance, and promotional materials.
– The reseller may be required to meet certain sales quotas or purchase minimums.
Which is Right for Your Business?
Both distribution and reseller agreements can be effective in expanding your market reach and increasing sales. The decision on which type of agreement to pursue will depend on your business needs and goals.
A distribution agreement can be ideal for a supplier looking to control the pricing and marketing of their product while leveraging the distributor’s expertise in a specific market.
On the other hand, a reseller agreement can be ideal for a supplier looking to increase sales while giving the reseller more control over the pricing and branding of the product.
In conclusion, understanding the differences between distribution and reseller agreements is crucial for any business looking to expand its reach and increase sales. By choosing the right agreement, you can effectively partner with another business to reach your goals and grow your business.