What is a distribution agreement checklist?
The legal agreement between suppliers and distributors of goods, also known as the distribution agreement, contains regulations on product deliveries, testing requirements, and delivery risks. This document serves as a legal reference for contractual questions regarding financial costs and product distribution errors. It’s an official document that makes mutual responsibilities transparent. In this way, misunderstandings and process errors can be avoided.
A distribution agreement checklist provides an overview of issues to take into account before a deal has been struck. It provides an easy way to ensure that no important issues are overlooked.
This article explains:
1. Important aspects of a distribution agreement checklist
2. 4 steps to the distribution agreement checklist
3. A digital solution for the distribution agreement checklist
What are the important aspects of the distribution agreement template?
In order to clarify the contractual obligations and to ensure a smooth operation, you should definitely pay attention to the following aspects:
- Information on the contracting parties
Here, you’ll want to define any and all information that is relevant to the partnership. This will need to cover company names, products they deal in, addresses, signatures, etc.
- Detailed descriptions of the products and services
You’ll want to be very careful in this section of the agreement to outline each product and whether or not you have any exclusive right to them. For example, are you the exclusive distributor in a specific country?
- Concrete tasks as well as outlined procedures for both parties
Outlining specific procedures each party must complete to fulfill their end of the bargain is necessary to avoid confusion about the respective supplier and distributor’s responsibilities. This might include deciding on product lead times, enquires, stock, etc.
- Regulations concerning the protection of areas
In other words, a distribution document will have this information listed under the territory section. Within this section, two contracting parties will decide on how they distribute goods in any manner of their choosing. For example, it could be divided based on country, state, territory, province, counties, cities, etc.
- Acquisition procedure
The two parties should also establish procedures on what happens if a new product is marketed during the contract’s term. Does the distributor have a right to this product? How will it be distributed? These questions need to be answered in this section.
- Term and notice periods
How long will the contract be valid? Will you include a probationary period? How many week notice period will either party need to give in order to terminate the contract?
- Financial agreements (including sales targets)
This might look like imposing a quota or a minimum requirement on how many of these products are bought and sold within a certain timeframe. Usually, this will be structured on monthly basis, but it can also be set up to be punctuated in quarterly, biyearly, or yearly increments. However, this section also includes rights to exclusivity, profit percentages, and any other financially-related data.
- Procedure for the training of employees
Deciding which party is responsible for completing which task is fundamental to defining the employee training procedures. Going off the previous example, if the distributor is responsible for making enquires, then they will also have to make sure they have enough personnel to keep up with the demands of the job. Both parties should then agree on the job responsibilities and duties to ensure that expectations are being met.
- Rules on possible conflicts that may arise
This is perhaps the most important aspect of a distribution agreement to ensure a successful partnership. How will you deal with defective products? Making repairs can be expensive, so it should be outlined in the contract who is culpable for the cost and materials. Rules for each conceivable contingency needs to be thought of in advance.
The distribution agreement exists to protect against any misunderstandings that could arise later down the road from poor initial verbal communication. It will also protect your company against partners inventing new rules or rights to the product that you haven’t previously agreed to. In short, this document is a legal and binding agreement between two parties to do business with the other without the fear of undocumented modification to the original accord.
What are the 4 steps to the distribution agreement template?
The distribution agreement is a complex document that tries to bring two different parties into agreement. Therefore you should be well prepared in advance. The following 4 steps will help you to start formulating conditions:
- Find out about the formal requirements of a distribution agreement
The official document for the distribution agreement covers a variety of formal aspects, which you should be aware of in advance.
- Define the distribution agreements
Record which distribution agreements exist and are relevant in your company and document them.
- Specify possible initial scenarios
Determine whether there is a claim for compensation in the event of termination. Also, define which other agreements are necessary in case of conflict or similar.
- Use a checklist for the distribution agreement
A detailed checklist is the best way to get an overview of the many aspects of an effective distribution agreement. Use it to draw up an outline of your internal conditions and to check the finished document.
A digital solution for the distribution agreement checklist
With a digital application, you can carry out a distribution agreement effortlessly and time effectively. In the desktop version, you can create checklists or use a template from our template library. The digital checklist guides you step by step through the distribution agreement.
This ensures that you don't forget any checkpoints and that you can fully evaluate all the data collected. At the same time, you minimize the risk of quality losses and documentation errors. More benefits from the Lumiform app include:
- The flexible checklist builder from Lumiform helps you easily convert any individual paper list into a digital distribution agreement checklist.
- Attach and annotate unlimited photos and documents for easy reference.
- Share documents within the organization and grant access only to authorized personnel anytime and anywhere.
- Using the super intuitive mobile app, you and your teammates canconduct change requests in no time at all.
- Store distribution agreements securely in the cloud for safekeeping and easy access.