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Indirect sales agreements

Indirect sales agreements are agreements where the company appoints third parties to sell their products/services on their behalf. There are many different type of agreements for indirect sales agreements and the most common are agency agreements, distribution agreements and franchise agreements.

Agency agreements

The agent has more restrictions than for example a distributor. The agent acts on behalf of the principal and has certain protections that a distributor does not have, which are more in line with that of an employee. An agency agreement is most suitable for a client in the event that the client wishes to enter into the contract for the sale and/or purchase of products and/or services in order to keep control of the sales process. The law on agency is largely based on compulsory law based on the Directive relating to self-employed commercial agents (86/653/EEC), which means that parties are compelled to comply. Agency agreements include provisions such as

  • Appointment of agent
  • Provision
  • Territory
  • Term
  • Termination provisions
  • targets
  • goodwill compensation etc.

Distribution Agreements

A distribution agreement is an agreement that is entered into for a fixed or indefinite period and has there are no specific provisions for distribution agreements in the Dutch Civil Code. The influence of the principal in such agreement is much less than with an agency agreement. The distributor has an obligation to sell the products and/or services in his own name and the principal has an obligation to sell the products and/or services to the distributor. Exclusivity as well as minimum purchase requirements are essential elements in such agreements and are subject .

Distribution agreement cover the following topics:

  • Appointment of the distributor who then independently enters into agreements with his customers

  • Term

  • Territory

  • Pricing and delivery

  • Mechanism relating to placement of orders

  • Product liability

  • Minimum purchase orders

  • Competition during and after termination of Distribution agreements.

  • Marketing and budget

  • Licencing requirements

  • Assignment or change of control

  • Applicable law and forum choice etc.


    Distribution agreements also have a competition element because the parties are fencing of a territory which may restrict competition. Generally speaking this is not allowed, but there are a few exceptions. The EU has published a new “De Minimis Notice”, which is relevant for cross-border agreements whereby the market share of both parties together exceeds 15%.

    Then you also have block-exemptions that are applicable to distribution agreements as set out in the Regulation for vertical agreements (330/2010). This block exemption allows market sharing under very strict conditions. In order for the distribution agreement to apply this block-exemption, the market share of both parties should not exceed 30%. The consequences of non-compliance to the above, can lead to nullification of the (vertical) agreement or the clause in addition to fines.

Franchise agreements

Franchise  agreements is where two companies closely work together on the same concept. The franchisee is independent and gives the look and feel of being the same company as the franchisor.

There is no specific legislation on franchise agreement under Dutch law, which means that the general principles of legal business agreements apply as well as case- law.

The franchise agreement can consist of the following aspects

  • the duration of the franchise agreement
  • the rights and obligations of the franchisee
  • the payments to be made by the franchisee
  • the identity and requirements of what the shop needs to look like
  • any licences granted to the franchisee for the use of the logo and/or name etc
  • the minimum purchase requirements of the franchisee
  • description of the advertising that the franchisee needs to do
  • the minimum amount of insurance cover that the franchisee is required to have
  • the standard policies of the franchisor that are applicable to the franchisee and also its staff.

Please contact Madelon van Breemen on (+31) (0) 10 2092756 or at vanbreemen@lvh-advocaten.nl for further information.

Bouwe Bos

litigation

+31 (0)10 209 27 63 bos@lvh-advocaten.nl
Madelon van Breemen

International business to business contracting

+31 (0)10 209 27 65 vanbreemen@lvh-advocaten.nl
Daniël van Genderen

litigation, tender, business and government

+31(0)10 209 27 45 vangenderen@lvh-advocaten.nl
Peter de Graaf

insolvencies and reorganisation

+31 (0)10 209 27 52 degraaf@lvh-advocaten.nl
Yvonne Jansen

rental (contract and eviction), business and shareholders, property

+31 (0)10 209 27 75 jansen@lvh-advocaten.nl
David Harreman

Enterprise and government, Enterprise and shareholders, National and International Tax Law

+31 (0)10 209 27 77 harreman@lvh-advocaten.nl
Lisa Kloot

employment Law and employer representation

+31(0)10 209 27 61 kloot@lvh-advocaten.nl
Ben van Nieuwaal

business and government

+31 (0)10 209 27 45 vannieuwaal@lvh-advocaten.nl
Michelle Reevers

aviation, commercial contracts, business and shareholders

+31 (0)10 209 27 75 reevers@lvh-advocaten.nl
Hans Rijntjes

litigation, rental (contract and eviction), collection, business and shareholders

+31 (0)10 209 27 55 rijntjes@lvh-advocaten.nl
Rob Steenhoek

insolvencies and reorganisation, business and shareholders

+31 (0)10 209 27 52 steenhoek@lvh-advocaten.nl
Peter Verheijden

commercial cooperations, mergers and acquisitions, employment law and employer representation 

+31 (0)10 209 27 75 verheijden@lvh-advocaten.nl
Justin de Vries

insolvencies and reorganisation, business and shareholders

+31 (0)10 209 27 52 devries@lvh-advocaten.nl

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