The Agreement

Distribution agreements, licenses and franchise agreements are all legal vehicles which allow business to be conducted efficiently and the business interests of both parties to be identified and protected.

The agreements do not have to be complicated documents shrouded in mystery.  They should be simple scripts which are easily understood and simple to read. Ideally the agreements should lay a platform for the success of the business arrangement and should be reviewed at a regular basis.

No agreement should be entered into without seeking the advise of an IP professional or franchising lawyer.

Distribution Agreement

The majority of distributorships are non-exclusive.  As a consequence a franchise may offer significant advantages in terms of market presence dominance. A distribution agreement is a contract between a manufacturer, producer or importer and the seller or distributor.

The distributor may be an exclusive agent selling only those goods belonging to the producer or, as is normally the case, the exclusive agent is the only distributor of a particular producers goods in the market.  And exclusive distributorship may allow the distributor to grant sub-distribution licenses.

License Agreement

A license arrangement is a business arrangement where a licensor via a monopoly right such as a Patent, a Trade Mark, a design or a copyright  has to exclusive right which prevents others from exploiting the idea, design, name or logo commercially.

The license allows the licensee to use make and sell, the product or name for a fee without censure. In a Trade Mark license, for example, the licensee will be granted full privilege to use the Trade Mark on goods or services provided that the use is in accordance with agreed signage protocols and quality guidelines. There is usually no training component, product development strategy and limited marketing support.

Franchise Agreement

As previously discussed, a franchising arrangement might be considered to be a more robust arrangement for new entrants into a line of business.   The franchise agreement covers obligations on both parties and includes a training, mentoring and technical advise component for the franchisee.  A franchise agreement is a specialised license and will cover all aspects of IP, user obligations and use provisions.