Practice area Distribution, franchising and agency
Dirkzwager’s DFA specialists can help your business address the legal aspects appropriately, for example, by assisting your enterprise to draw up the right contracts. In addition, our legal advisers can help you interpret, manage and terminate contracts or should any dispute arise pursuant to them.Commercial collaboration between businesses
Businesses which start to work together to sell goods or services frequently have to contend with the question as to the (contractual) structure through which they wish to collaborate with each other. Distribution, franchising and agency agreements are the most commonly used types of contracts in sales and trading channels. In practice, it may be difficult to draw a distinction between them, with the result that your business may be exposed to unnecessary risks.
When should you opt for distribution, franchising or agency?
- Distribution: a distributor (dealer or reseller) purchases products and/or services from suppliers. The dealer then sells them – often exclusively – to their customers at their own risk and expense.
- Franchising: a franchisee does this as well but also uses the franchiser’s trademarks, name, know-how and logo.
- Agency: a business agent mediates for the purposes of (commercial) agreements between their clients (principals) and other parties. This occurs at the principal’s risk and expense. The agent receives a commission for their work.
Different types of contracts apply in the case of these three forms of collaboration. A distribution agreement is not prescribed by law. A supplier and a distributor are at liberty to make any arrangements that they require by means of a distribution agreement. As such, they may stipulate goodwill or clientele compensation themselves.
In the case of agency and franchising, on the other hand, legal requirements apply which protect the commercial agent or franchisee respectively, such as a specific term of notice, restrictions on post-contractual restraint-of-trade clauses and, in the case of agency, entitlement to compensation for goodwill upon the termination of the contract.
Distribution, franchising and agency team
Dirkzwager’s DFA team has a range of expertise and experience to provide legal assistance to businesses in relation to their commercial collaboration. In this respect, consider the preparation of contracts, the provision of advice concerning their termination and also the institution of legal proceedings in the case of a dispute. Common issues include liability, compensation, unreasonable purchase prices, inaccurate forecasts, terms of notice, (interim) termination options, the interpretation of an agreement, verbal undertakings and exclusivity. Thanks to our specialists’ extensive experience, they are able to resolve legal matters and limit risks.
Legal advice across the board
Commercial contracts frequently involve more than merely contract law. Disciplines, such as tax law, intellectual property, competition law and tenancy law, frequently occur in commercial contracts. Consider, for instance, a franchisee who occupies retail premises.
In practice, it also happens that parties do not opt for distribution, franchising or agency but for a joint venture. Dirkzwager can also help you establish a new entity, such as a private company with limited liability.
As a full-service firm, Dirkzwager will gather all of its expertise and experience to focus on your concerns. Thanks to our various specialisms, we can provide your business with advice and assistance across the board.
DFA and foreign legislation
If you have to contend with cross-border collaboration, you will also need to consider foreign legislation, for example, should you enter into a contract with an American party or have to consider international arbitration avenues. Distribution agreements frequently include a cross-border component, for example, one that is legally anchored in Belgium but not in Germany, with the result that it is virtually equated with an agency agreement.
Dirkzwager has a German desk for the German market and is also affiliated to TELFA, a European network of law and notarial firms. In the case of the United States, Dirkzwager actively works together with American firms through the USLAW network. Finally, Dirkzwager works together with firms in the BRICS countries, amongst others, throughout the world.
Our lawyers
If you require legal assistance or have any questions, you may contact any of the following specialists free of obligation: