For companies that work in manufacturing, the way goods are sold is as important as the quality of the goods themselves. While some companies are structured to sell their own products directly to consumers, most companies use distributors or partner companies that take over the point of sale. In addition, producers need to be aware of their own market position, because while some distribution agreements may theoretically be completely legal, they can become illegal if they are used to terminate an existing monopoly on market shares, for example where an undertaking can behave independently of other competitors on the market and outside market pressure due to its existing agreements. When an undertaking with a major market share concludes an exclusive distribution agreement with the undertaking which owns the 10 most lucrative distributors, this effectively puts an end to the competitiveness of the other undertakings. In this case, the standard exclusive distribution contract may be legal, but the situation exposes the company to the risk of legal and financial actions. Exclusive distribution agreements work if they are beneficial to both parties. The decisive advantage for the distributor is to be the sole producer of certain products, especially when these products are successful and have a high profit margin. There is also the obvious advantage of being able to control the message sent by advertising and marketing, as well as the advantage of not having to deal with other distributors who can compete for volume and turnover in the same region. In cases where these factors are correct, most distributors gladly accept exclusive distribution. Both parties may use an exclusive distribution agreement in different ways.
Sometimes the distributor is the sole distributor of the supplier`s product in a given geographical area. In other exclusive agreements, the distributor has the exclusive power to sell the product to certain customers, which means that no other distributor can sell to those customers. Exclusive agreements are often used when the product is expensive or if it is different and technical, which requires special knowledge of the products and the market. An exclusive distribution agreement is similar, unless an exclusive distributor becomes the sole point of sale of those products in that specified area. The producer will not sell the product himself and will not use other distributors. At the other end of the scale, a selective distribution agreement limits a company to a small collection of distributors employed in a region and a non-exclusive distribution agreement does not limit either party in terms of distribution and sales. All of this has its own advantages and disadvantages when it comes to business. There are many different ways to fit into these kinds of arrangements. It is an exclusive distribution agreement or an exclusive distribution agreement where the supplier or manufacturer employs only one distribution undertaking in a given territory. This does not prevent the manufacturer from selling its own products directly in this region through its own accounts; It simply limits to a single company the distributors with whom the supplier works. Often, this type of agreement expects the trader to rely exclusively on them and does not sell or sell the same type of goods for competitors….