I want to setup distributors across South Africa to sell my product....

I want to setup distributors across South Africa to sell my product. Can I change a standard distribution agreement to suite me?

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What you need to set up is a legal contract in order to be able to sell your product. This is done through a distribution agreement drawn up by a supplier of goods who wants to appoint a third party to sell their products or services.

Standard contract can be used

One can use a standard distributor’s contract, which includes all the critical issues, and change or add clauses to suit you – within reason. You should have legal advice before adding and subtracting clauses.

A distribution agreement is a contract that governs the marketing of a product. Typically, the agreement is between two or more people and can be enforced by the commercial laws of the country.

Pro’s and con’s

The disadvantages of a distribution contract are that the distributor will want discounts and preferential terms. It is possible to lose control of the marketing and pricing of your product, and distributors might want long terms of exclusivity.

The upside is that if you outsource your distribution the distributor is responsible for warehousing and transporting your goods.

What you should not forget

Any distribution agreement should cover the geographical limits, where you are allowed to sell your product direct, if there will be other distributors, and what the distributor will be paying for your product.

The agreement should clearly state how long the distribution agreement will be in effect and whether it can be terminated early by either party.

Modifying clauses

If you wish to modify or add clauses, it’s recommended that you seek legal advice. Only a professional written legal document will stand up in a court of law.

Once both parties have signed the agreement it is a legally binding contract. Changes must be agreed to by both parties and will usually require a new distribution agreement to be drawn-up and signed.

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