Distributorship and Franchise

Distributorship and Franchise

An Agency Agreement


It is a type of contract formed between two parties, one being principal who manufactures a product or provides services for sale and another being agent who will help to sale the products and services of the principal in is behalf both agreeing to work together.

It is a fiduciary relationship created where the agent holds opposition of trust with the principal to act as if it were the principal when selling the principal’s goods and services.

Format should an agency agreement be in and  Should it be in writing

It is advisable for an agency agreement to be in writing because it is a contract between the two parties a written statement of terms enforceable restrained of trade clauses must be in writing ideally drafted agreement helps each party to clearly understand as to their rights, duties, activities and restrictions which also includes the provision to termination of the agreement done.

An Agency Agreement Includes

Broadly the terms and conditions should cover:-

  • Detail of both the parties.
  • Interpretation and definition.
  • Duties and responsibilities of each other and themselves
  • Details of compensation; indemnity; and commission payment including when and how the amount is to be paid.
  • The term of agency for example the level of authority to enter into sales agreement.
  • Details of the geographic territory or region in which the agent will be operating.
  • Duration of agreement, breach of contract and termination.
  • Any performance target to be met.
  • Protection of intellectual property, trade secrets and other confidential information.
  • Anti bribery conditions.
  • An exclusive sole or non exclusive rights.
  • Detail of any none compete agreement.
  • Governing law and jurisdiction.

An exclusive agency agreement

An exclusive agreement is usually where the agent and principal agree that the principal want a point other agent i.e. competitor in the agents territory nor actively seek sale itself. It also prevents the agents from making similar arrangement with the principal’s, competitors.

FAQs- License

  1. Explain what is a license ?

A license is an official document which gives permission to do something or use some process or own something.

  • What is an example of licensing ?

Example of licensing is includes a company using the design of a popular character e.g. Mickey mouse is use by a popular food franchise on their products. A clothing manufacturer like Allansolly licensing its designs and brand in a certain country to a local company to market their products.

  • What are the types of licensing?

The most common types of licensing agreements includes technology license (patent), (merchandise), copy right and know-how. Sometimes these agreements include more than one type of intellectual properties which are part of a licensing agreement. 

  • Basic understanding of franchising?

By franchising means that you are allowing another person to duplicate your business in another location and licensing is when you allow someone else to sale your products under your own brand name.

  • What is the franchise license ?

A franchise license helps to create the commercial relationship between franchiser and franchisee. It passes a certain rights to the franchise to use the name, logo and identity of the establishment in order to start a branch of that particular franchise in local surroundings.

  • Is franchising a firm of licensing?

Franchising is a way to scale a business, once it is successful and proves. It is involves finding franchise with the skills necessary to operate branches of the same business with the same idea, licensing of intellectual property is at the heart of a franchise contract. So, infact a franchise includes licensing.

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