Exclusive Distributorship Agreement
You’ve invented a product and now you’re ready to take it to market. But don’t jump into an exclusive distributorship agreement with the first person who shows interest in your product. There are a few things you need to know first.
Never Grant Exclusives Without Guarantees
The first thing everyone will ask when they approach you about selling your product is whether they can have an exclusive or not. I can’t really blame them for asking. Because if they are going to put a lot of time and money into your product, they want to know that they have an exclusive to sell it and keep competition away.
In the beginning I used to do that without asking for guarantees upfront. Big mistake. When people think they have an exclusive for your product they can take their sweet time and never even sell your product. After all, they have an exclusive locked up for no consideration upfront. And this means that while they do take their time, you’ve technically locked up an entire country or region and can’t sell or get anyone else to sell there.
I never enter into any kind of agreement until I see that the distributor is serious and is actively selling and working hard to get customers. I give everyone the benefit of the doubt while not signing any exclusive contracts. In the beginning I won’t work with any other distributors or only one or two depending on how big the region is. But I’m always upfront about it and don’t allow customers to go around my distributors to try to get a better price from me.
Start With a Trial Period
Not all distributors have deep pockets to be able to buy a huge minimum upfront. That doesn’t mean they won’t make great distributors. Most of my best distributors started off with 5,000 units. You might want to start off with a short trial period in the beginning. But also make sure it’s long enough for them to have the time they need to make contacts and start selling.
Make sure you are in constant communication with your distributors and be sure to give them all of the marketing and promotional materials they need to sell your product. Keep them updated on any publicity that comes out and on best practices from other distributors.
Through the years I’ve picked up an intuitive sense of who is going to work out and who isn’t. The distributors who have been a part of your product and your company become a little like family. Treat them well and they will be motivated to make your brand the best it can be.