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.
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
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
Pricing and delivery
Mechanism relating to placement of orders
Minimum purchase orders
Competition during and after termination of Distribution agreements.
Marketing and budget
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 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
Please contact Madelon van Breemen on (+31) (0) 10 2092756 or at email@example.com for further information.
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