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Distribution and Commercial Contracts

Every business is looking for the best distribution mechanisms to sell its products or services. A start-up will just focus on selling. When the products are to be sold on foreign markets cooperation with reliable local partners is key. A local partner should have extensive knowledge of the market and a comprehensive network. If the local partner will act as (commercial) agent, distributor or franchisee needs thorough study.

Conversely many businesses are active in Belgium as a branch or representative of foreign companies.

Vobis assists businesses in setting up appropriate distribution systems and gives advice on t the most suitable legal joint venture structure.

For example, a choice will have to be made between a (non) exclusive or selective distribution system. Competition laws must be observed when drafting the agreement. The fact that Belgium has a unique legislation is of particular importance, as it provides strong protection for a Belgian distributor in the event of termination of open-ended exclusive distribution agreements.

A franchising agreement requires that proper attention be given to precontractual information obligations which the franchisor must comply with. Such obligations can lead to severe sanctions in the event of non-compliance.

Some real life questions that might arise:

  • Is the commercial agent still entitled to commission for agreements with effect after termination of the commercial agency contract?
  • What about a finder’s fee or goodwill?
  • Can a supplier from country X prohibit his distributor in country Y from selling in country Z via his website?
  • Are there clauses that should never be in a distribution agreement?
  • What legal formalities must the franchisor comply with in the precontractual phase?