Picture this – You’ve just had a killer idea for a product that addresses a need like no other product on the market, and you’re sure it’s going to make huge waves.
You wrangle up the funds to start making it, and soon enough, you’ve tested it, analyzed the market, and your product is rolling off the manufacturing lines.
But you’ve come across a roadblock – You don’t know how you’ll get your product out to your potential customers. You’ve got the product, but you haven’t thought about how you’ll distribute it.
Luckily you know an organization that does precisely this, and you want to enter into a partnership with them. But it would help if you had something to make your partnership concrete, detail all the parties’ responsibilities, and how the partnership will work.
A distributor agreement is what you require.
What is a distributor agreement?
A distributor agreement is a contract detailing the framework of a business relationship between two parties – a supplier of goods and a distributor of goods.
The supplier can either be a manufacturer or a vendor, and in some cases, the contract may also involve two or more distributing entities.
Why do you need a distributor agreement?
Typically, businesses that produce tend to focus on production, and in several cases, do not have the infrastructure or expertise to sell their products by themselves.
Getting your product out there isn’t an easy prospect, either. You need to set up distribution channels, come up with consumer strategies, marketing plans, and analyze the demand chain.
Fortunately, there are several businesses out there that specialize in this sort of thing.
You sell them your products, and they devise strategies and channels to sell your product. Selling your products to a distributor essentially means that you get into a business partnership with them, and any business partnership needs to be backed up with an agreement.
What’s in a distributor agreement?
The contents of a distributor agreement may vary depending on the laws of the territory in which the contract is enforced. Still, any standard distributor agreement will address the following critical aspects of the business relationship between the supplier and the distributor.
1. Scope: When detailing the scope of the partnership, a distributor agreement must illustrate
a. The territory in which the distributor is to market and sell the product
b. The specific products that the distributor is permitted to sell
c. Whether the distributor retains exclusivity with regards to the selling of the product(s)
d. The term for the agreement, and periods of renewal
2. Pricing and payment terms: A distributor agreement should detail the terms for product pricing and payments, including
a. The price at which the product is sold to the distributor
b. The terms of payment including timings and penalties
3. Rights and obligations: The agreement should set forth both the parties’ rights and their obligations under the contract. This includes
a. The scope of marketing and advertising that the distributor is permitted to engage in while selling the product
b. The format and frequency of any reports that the distributor is required to submit to the supplier
4. Intellectual property: Distributor agreements require a clause allowing the distributor to use the supplier’s intellectual property, including brand names and trademarks, for sales and marketing purposes. This clause also serves to protect the intellectual property of the supplier
5.Termination: Finally, a distributor agreement should contain a section devoted to the partnership’s termination, which should include
a. The circumstances of termination
b. The obligations of both parties following the termination
How can electronic signatures help?
Now that you know what a distributor agreement is and why it’s important, let’s talk about why electronic signatures are the best way to execute the agreement.
- Digital signatures are completely remote – Suppose you’re planning to sell your product in an overseas market, and you’ve set things up with a distributor there. You can execute the agreement instantly by having the distributor sign it using digital signatures and save on document shipping costs.
- Electronic signatures instantly lock in the agreement – Electronic signatures allow the terms of the agreement to be finalized and executed quickly. This is generally advantageous to smaller businesses that cannot afford to enter into protracted negotiations.
- You can onboard distributors quickly with digital signatures – Certain industries require different distributors to be onboarded on a short-term basis, such as the fast-moving consumer goods industry. Digital signatures are particularly advantageous in this case, allowing you to quickly onboard distributors and get your products out there.
- Electronic signatures are secure and cost-effective – Electronic signatures are secure, almost impossible to forge, and extremely cost-effective compared to wet signatures since they require substantially less time and effort to perform.
Electronic signatures are a quicker, cheaper, and safer alternative to wet signatures, especially for your distributor agreement.
Using digital signatures has been shown to massively reduce turnaround time by nearly 99% and boost efficiency for more than a hundred of our clients who used them.
How can you sign your distributor agreement with digital signatures?
Just upload your document to SignDesk’s application, sign using your Aadhaar number or digital signatures, and then invite the other party to also sign with eSignatures.
Electronic signatures allow you to quickly and remotely onboard distributors without in-person interactions.
Do you want to execute your agreements quicker and save on onboarding costs? Book a demo with us now to see how our eSignatures help you win more business!