Distribution agreement template

Distribution agreements are great tools for businesses that want to expand how and where they sell their products.

This guide will explain what purpose a distribution agreement serves, what it should include and how to best manage them. We've also got a free distribution agreement template for you to download or use in Juro.

What is a distribution agreement?

A distribution agreement is a legal document that establishes the terms and conditions between a supplier of goods and a distributor who agrees to market and sells those goods.

For businesses that rely on third parties to deliver their products to end-users, the distribution agreement is a foundational document.

Why use a distribution agreement?

A comprehensive distribution agreement can help your business and reassure your distribution partner by clarifying their rights and responsibilities and setting clear expectations. This, in turn, can mitigate the risk of potential disputes, should anything go wrong with your distribution partnership.

Here's why you should have one in place:

• Clear expectations: The distribution agreement outlines what is expected from both the supplier and distributor. This clarity ensures a smoother operational relationship.

• Dispute avoidance: Should disagreements arise, the agreement can serve as a reference point, often preventing minor issues from escalating into major disputes.

• Territory protection: The contract can specify territories for the distributor, ensuring that they have exclusive rights to sell in certain locations.

• Quality assurance: It can also include terms related to the quality of the products to be distributed, maintaining brand standards.

Who is responsible for managing distribution agreements?

Usually, it's the legal team's job to draft commercial agreements like the standard distribution agreement template.

Depending on the type of company, several departments might input into that process:

1. The legal team drafts, reviews, and advises on the contract terms, ensuring they are legally sound and protect the company's interests.

2. Operational roles such as the sales and operations teams monitor day-to-day contract compliance and performance.

3. The finance team oversees pricing structures, payment terms, and financial forecasting.

4. The management and executive teams make strategic decisions and approve the final agreement. Although, legal may want to review the terms again if something has changed.

The exact process can vary depending on the size of the company, the complexity of the agreement, and the organization's risk appetite.

What should you include in a distribution agreement template?

Distribution agreements can vary considerably depending on the goods being distributed and the nature of the relationship. That said, the typical distribution agreement template will include the following elements:

• Party details: Clearly outline the legal names and addresses of both the supplier and the distributor. This section should provide unambiguous identification to prevent potential confusion.

• Description of products: The agreement should offer a thorough description of the products involved. It could be a single product or a range of items, and the descriptions should be detailed enough to avoid any ambiguities.‍

• Territorial rights and restrictions: This section should define the geographical area in which the distributor is allowed to sell the products. Here, you might stipulate whether the distributor has exclusive rights in this territory or whether other distributors can operate there too.‍

• Terms of supply: This section outlines the logistics of the supply chain. It should cover things like delivery timelines, minimum and maximum order quantities, order placements and procedures, and conditions under which the supplier might fail to fulfil an order.‍

• Quality standards and compliance: To maintain the brand's reputation and customer satisfaction, the agreement should stipulate the quality standards the products should meet. This section may also include compliance with specific industry standards or regulations.‍

• Pricing and payment terms: Outline how pricing will be determined and when payment is expected here. You could include details about credit terms, discounts, and policies on price changes.‍

• Marketing and advertising: Often, the agreement will detail expectations for how the distributor should market and advertise the products. This could include stipulations on the use of trademarks, logos, and other brand identifiers.‍

• Term and termination: This part of the agreement specifies the duration of the contract, the renewal terms, and the conditions under which the contract can be terminated by either party.

How do businesses manage distribution agreements?

Understanding who manages distribution agreements is one thing, but what does the contract management process actually look like?

Well, this depends on whether the business has a distribution agreement template to hand, and what they do with it.

The manual process

The process can be arduous for businesses operating without a distribution agreement template.

Legal teams usually have to draft the contract from scratch, painstakingly writing out the specific terms and conditions tailored to each new distributor. This is usually done in an editor like Word.

Once drafted, internal teams will review and approve the contract, with any issues and amendments flagged in email chains or separate Word files. If the distribution agreement is particularly complex or high-value, this process can involve numerous rounds of revisions.

This same process is repeated when the distribution agreement is shared with counterparties for negotiation and signing. There's usually a lot of back and forth between parties and tools until the final terms are eventually agreed and signed.

The process is admin-heavy, time-consuming and repetitive for businesses that work with lots of distributors.

Can you automate your distribution agreement template?

Fortunately, it's possible for businesses to automate their distribution agreements and remove this friction. They just need to use a contract management solution like Juro that offers the following features:

• ‍Automated contract templates. Teams can generate distribution agreements in seconds using Juro's automated contract templates. The template is populated in Juro automatically using the information entered in a simple Q&A form or pulled in from other business systems.‍

• CRM integrations. Juro integrates seamlessly with popular CRM systems like Salesforce, HubSpot and Pipedrive. This means you can move data from distributor profiles into the contract fields automatically, which helps to avoid mistakes.‍

• Bulk actions. Juro lets you create and send multiple distribution agreements at scale with bulk actions. This feature is great for businesses that are working with new distributors on a regular basis.‍

• Native eSignatures. Distributors can sign their agreements in seconds and from any device with Juro's native eSignature feature. ‍

• Streamlined negotiations: Distributors can add questions or comments directly to the contract using Juro. This helps everyone understand and agree contracts up to ten times faster.

Automate your distribution agreement template with Juro

You can grab the free distribution agreement template PDF above as a starting point, but it will only get you so far - if you want to join the 6000+ companies already using Juro to power their contracts, hit the button below to book your personalized demo.