Wholesale Distribution Agreement

What a good one includes

• A precise definition of the geographic territory and whether the distributor has exclusive or non-exclusive rights to sell your products there.
• Clear wholesale pricing structures, payment deadlines, late fees, and the specific mechanism for how and when you can adjust prices.
• Explicit minimum purchase obligations that the distributor must meet quarterly or annually to maintain their distribution rights.
• Defined shipping terms, such as FOB or EXW, that clearly state exactly when ownership and risk of damage transfer from you to the distributor.
• Strict guidelines on how the distributor can use your trademarks, logos, and marketing materials to ensure your brand identity remains protected.
• A detailed exit strategy outlining the notice period required for termination and whether you have the right or obligation to buy back unsold inventory.

Common mistakes to avoid

• Failing to specify whether the distribution rights are exclusive, which can lead to accidental territory overlaps and legal disputes with other partners.
• Omitting clear minimum order quantities, leaving you stuck with an inactive distributor who blocks competitive sales in a region without generating revenue.
• Neglecting to define the exact point of delivery and risk transfer, causing costly arguments over who pays for goods damaged during transit.
• Forgetting to include intellectual property clauses, which can allow a distributor to register your brand name locally or market unauthorized modifications of your product.

Frequently asked questions