Agents & Distributors

In appointing an agent or distributor, the exporter is effectively sub-contracting the selling function of the business. The exporter may want to do this for a number of reasons such as taking advantage of an agent’s or distributor’s local knowledge and established trade connections, or as a cheaper alternative to establishing your own selling operation. The different attributes of an agent and distributor will be key to deciding which type of partner to choose. It may be the case that one type of relationship works well in one country and not in another, so it is quite likely that suppliers will have a mixture of channel partners. In practice, there is a good deal of confusion about the use of the terms "agent" and "distributor" with many businesses referring to their agents as distributors and vice versa. It is critical for legal purposes, particularly when considering termination rights, to ascertain the correct legal status of the individual or company.

Selecting agents versus distributors depends on a range of legal, financial and market factors. There is no one best standard solution
There are a considerable number of factors to consider when appointing a channel in the international market and it can be daunting for the exporter to make the choice between agent versus distributor, when other cultural factors such as language and distance from the market are added to the equation. However, it is important for any company considering a channel partnership to understand the differences, in practical and legal terms, between appointing an agent and a distributor. The chapter starts off by highlighting the characteristics of both channels and then discusses the duties and responsibilities in the relationship between supplier-agent and supplier-distributor. It is important to note that the typical commercial duties of an agent or distributor set out later in this chapter are not all set in stone. Except where there are legal reasons requiring the inclusion or exclusion of a particular provision, all of these can be negotiated.