Not the most scintillating topic going but I have spent the last few days looking into distributor agreements (sorry back to the secret squirrel project which I will finally be able to relay once I have the exclusive distributor agreement in place!).
Luckily I have a very useful lawyer friend (back to my previous blog on using your network!) who has helped me out by reviewing the agreement for me but more importantly by educating me on what to look for so that next time I can do it myself (oh the things I have learned in the last 3 months – I might dedicate a whole blog to the new skills I am gaining – but that’s for another day!).
It goes without saying that the best advice is to get an expert to review it, but as anyone who is starting out will tell you, the enormous list of services (legal, financial, logo and web design to name but a few) you require and the (often huge) costs of getting each of these done professionally means it all becomes pretty DIY in the early days. So based on that (and with all of the usual disclaimers that this advice is based on my opinion and in no way is professional legal advice!) here we go:
1) Set aside a couple of hours when you are at your most alert and won’t be interrupted by constant requests to open boxes and have your heart rate checked by your budding 2.5 year old baby doctor. Legal documents are tough reading for those of us not in the know and just getting through and understanding each point is no mean feat
2) Ensure that you have properly defined the geographical areas that the document is covering (i.e. is it just the UK, is Ireland included etc)
3) Establish exactly what you are after in terms of exclusivity. Do you want complete exclusivity or will the manufacturer also be allowed to trade in your territory? It is worth googling this for exact wording on what means what
4) Ensure you are happy with the period of the contract. Is one year long enough or will that just be the time it takes you to set up and therefore does it need to be 3 (I have been advised that 3 is a fair min)
5) Establish exactly which of the manufacturers products are included under the agreement. Is it one specific item or everything in their range?
6) Establish who is responsible for complying with local laws and formalities – you or them and understand how this is going to work (i.e. if there needs to be a CE marking on the labelling will they add this and what is the charge)
7) Be very clear on your numbers. Most agreements are based on the distributor meeting a min number of units within a set period How many units do you feel you can meet and also in what period you will do this in (i.e. calendar year, financial year, a year from your first order)
8) Establish the price per unit and be clear on what circumstances might necessitate an increase in this (you also need to be clear on what this does to your financials if it happens)
9) Agree what happens at the end of the contract and whether you have first right of refusal on renewal
This list by no means covers everything, but in my case it covered the key things we needed to agree. Fingers crossed (once my lawyer friend has done his final check) we will have agreed our distributor agreement and mum_business venture number 2 will be launched.
In the meantime back to cheekyelephant and finalising the website for launch. 2014 is already proving to be a busy year and we are only in the first week. I look forward to updating you very soon!