Reseller Vs Distributor Agreement

When distribution agreements transcend international borders, it is important that legal advice is sought for the respective jurisdiction(s). Local taxes as well as import and distribution laws may apply, which may affect the relationship or require documentation or submissions. Insurance requirements may also vary from jurisdiction to jurisdiction. The latter type of agent is starting to look like a distributor. Reseller is one of the many labels that we meet in this field. Other labels include distributors, value-added resellers (VARs), “partners” or “channel partners”, etc. all are expected to represent the role in a way deemed appropriate for any type of market ultimately defined by your target customers. None of the labels is necessarily used exclusively by the others and a dealer can be described in more than one of these ways. From a legal point of view, there is no difference between a distributor and a reseller.

Any differences between the two are purely commercial and are reflected in the drafting of the corresponding agreement. For example, a reseller is usually less closely related to the manufacturer and sometimes has no direct relationship with the manufacturer, as they usually buy products from distributors. As a rule, resellers do not keep an inventory of products or offer after-sales services. Resellers usually only sell to final consumers or wholesalers. For a manufacturer with an established and recognized product, a reseller relationship may be the most profitable, as resellers are less invested in developing the product market and therefore offer higher profit margins for the manufacturer. Will you name the distributor on an exclusive basis or not – will he be the only person in this region who can sell your products? Even if you agree to an exclusivity agreement, you may wish to reserve some existing customers for a direct relationship, in which case this will be stated in the agreement. So is it better to use a distributor or reseller to market your product and are there any real differences between them? Suppliers should be careful with price restrictions….

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