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    Good Distribution Contract Terms

    Uploaded by

    Ahmed Eljenan

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    © All Rights Reserved
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    Good Distribution Contract Terms

    Uploaded by

    Ahmed Eljenan
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    good distribution contract terms

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    19 views1 page

    Good Distribution Contract Terms

    Uploaded by

    Ahmed Eljenan

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    good distribution contract terms

    Based on my experience of contract negotiation for doing business in Japan, I recommend the
    following list of terms to require in a negotiation of a Japanese distributor agreement:

     transfer fees calculated on net revenue not on your head-office price-list,


     transfer fees to include not only product sales but any support, maintenance and ongoing
    consulting provided in association with your product,
     floor or minimum price,
     price-list with a schedule of maximum discounts,
     restriction on the use of sub-distributors or the total percentage retained by sub-
    distributors, especially if they are subsidiaries of your distributor,
     guaranteed minimum transfer fees paid quarterly,
     monthly submittal of accurate in-progress sales forecasts and monthly (minimum) review
    of those sales forecasts,
     terms to ensure that you do not take the full hit of any adverse exchange-rate
    fluctuations,
     direct access to key customers allowing direct product feedback to occur - you do not
    want precious and valuable feedback going through the unnecessary filter of your
    distributor's management chain,
     direct access via VPN, Outlook Web Access etc. into a secured zone of the distributor's
    contact management system to allow you 24/7 up-to-date account and forecast data
    irrespective of time zone differences,
     minimum level of advertising required to properly promote your product (e.g. at least 5
    magazine advertisements per month, a dedicated Web site, etc.),
     minimum staffing level required to properly promote your product (e.g. full-time
    salesperson, full-time marketing person etc.) and preferably name them in the
    agreement,
     minimum performance criteria with clearly stated termination terms,
     minimum performance terms required to maintain any exclusivity,
     protection against being used as a loss-leader (e.g. minimum prices etc.),
     protection against your distributor quietly developing a competitive product to your
    product (while of course using your product to build their future customer base!).

    A final comment - in addition to skilled contract negotiations at the outset, a Japanese distributor
    relationship needs to be very closely and locally monitored if it is to produce consistent revenue
    and profits and not degrade into a frustrating mess with a very negative effect on your Japanese
    market brand image. In fact, to properly support a distributor you will probably need to setup a
    Japanese office and very often it will require almost as many local staff to support the distributor
    as to sell direct. I suggest that before starting any distribution contract negotiation, you carefully
    consider the substantial benefits of setting up a Japanese subsidiary company or office to do
    direct sales in Japan - only after eliminating the direct sales option would I consider committing to
    a distributor-only strategy.

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