Exclusive Distributorship Agreement with Factory Warranty and Service Provisions
Agreement made on the _______________________ (date) , between ______________
_____________________ (name of Company) , a corporation organized and existing under the
laws of the state of ________________, with its principal office located at _________________
____________________________________________________________________________
(street address, city, county, state, zip code) , referred to herein as Company , and
_____________________________________ (name of distributor), a corporation organized
and existing under the laws of the state of _______________, with its principal office located at
____________________________________________________________________________
_____________________________________ (street address, city, county, state, zip code) ,
referred to herein as Distributor .
Now, therefore, for and in consideration of the mutual covenants contained in this
agreement, and other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. Agreement to Sell Company's Products
Within the bounds of the area of responsibility allocated to Distributor by Company
(specified in Section Two ), Distributor agrees to sell new _____________________________
(name of product) and parts of Company and to provide adequate facilities for sales and
servicing of these products and parts.
2. Sales and Service Area
The following is the area of responsibility allocated to Distributor : (description of sales
and service area) ____________________________________________________________
hereinafter called the sales and service area .
3. Satisfactory Sale of Products
Distributor shall properly develop to Company's satisfaction the sale of ____________
_____________________________ (type of product) products in the sales and service area
specified in Section Two . An adequate sales staff and customer relations organization to take
care of the sales potentials in the above area shall be maintained. A minimum sales staff and
customer relations organization shall be defined as __________ (number) of full time
salespersons, each of whom will use the ___________________________________________
(name of sales management system) , reporting a minimum average of __________ (number
of sales calls per day) retail sales calls per day.
4. Demonstrators
Distributor recognizes the value of having display-worthy Company products available
to show the public and agrees to own an adequate number of ___________________________
(type of product) of each current production basic model available for demonstration, with a
minimum of (description of minimums for each product) ____________________________
____________________________________________________________________________ .
Company agrees, under this Section, that one model, _________________________________
____________________________ (description of demonstration model) , which Distributor
is to maintain available for demonstration purposes, may be up to _____ (number) months old.
5. Dealers
To properly develop the sale of Company products in Distributor 's sales and service
area, the appointment of dealers by Distributor is anticipated. In appointing dealers,
Distributor agrees to carefully consider them in the light of Company 's recommendations as to
requirements, classes and commissions set forth in the current recommended Distributor 's
dealer agreement. Each appointment will be subject to Company approval, but in no event will
the dealer become a direct agent of Company .
6. Prices and Commissions
Company agrees to furnish Distributor current prices of new Company ___________
___________________ (type of product) products and to furnish Distributor schedules of
commissions and terms of purchase, and further agrees to keep Distributor advised of any
changes in these prices or schedules of commissions and terms of purchase.
7. Orders
A. In order to facilitate the orderly scheduling of production and shipments,
Distributor agrees to submit Distributor 's orders for new _____________________________
(name of product) as far as possible in advance of required delivery. Company will then
schedule production against Distributor 's commitment. Distributor agrees to accept all
Company products ordered by it. Company will not ship its products to Distributor except on
Distributor 's orders. All orders are subject to approval and acceptance by Company at its
principal place of business.
B. Company agrees to give careful consideration to all orders received from
Distributor and expressly reserves the right to follow or depart from such orders in details of
equipment, trim and color, and Company shall in no way be liable for failure to ship or for delay
in shipments, however caused, or for shipping over routes other than those specified by
Distributor .
C. If Distributor fails to accept ________________________________ (name of
product) ordered and to pay for the same as agreed when notified by Company , Distributor
agrees that Company may retain Distributor 's deposit on the order as liquidated damages for
breach of the acceptance, and then Company has the right to otherwise dispose of the
______________________________ (name of product) with no further liability to Distributor .
D. Distributor also agrees to comply with Company 's request for estimates of
Distributor 's prospective requirements of Company 's products, but such estimates are not to
be regarded as orders by Company .
8. Restricted Sales by Company
Company and Distributor recognize there are certain types of buyers to whom
Company should offer to sell its products directly. Therefore, Company reserves the right to
sell any products referred to in this Agreement for experimental or development work, to its
employees, to suppliers, to government bodies, or to fleet buyers. Distributor further agrees not
to sell new Company products to be exported, except where prior written arrangement with
Company has been made.
9. Advertising
A. Distributor recognizes that advertising of Company 's products may affect other
Distributor s and Company . For the protection of good will of Company 's products,
Distributor , in the sale of Company 's products, agrees to use only advertising that is supplied
or approved by Company , or that conforms to the policies of Company and other provisions of
this Agreement, and agrees to forthwith discontinue advertising disapproved by Company when
so advised by Company .
B. Distributor further agrees to purchase from Company and display a
(description of sign) ____________________________________ outdoor sign designed by
Company for standardization in identification as an authorized Company Distributor . In
addition, Distributor agrees to enter into a program to display such other signs as are
necessary to advertise Distributor 's business properly and display the name (trade name)
mutually satisfactory to both Company and Distributor . In addition, Distributor agrees to enter
into a program to use direct mail advertising and other sales tools as provided and/or
recommended by Company and to carry a satisfactory stock of such sales tools for use of
Distributor 's salespeople and dealers.
10. Sales and Service Area Service Fee Adjustments
A. In the interest of promoting good service to the public and with a view to fair
dealing between Distributor s , Distributor agrees to confine Distributor 's sales and selling
efforts to the sales and service area as provided in Section Two of this Agreement and agrees
not to advertise or use salespeople or unofficial representation in any other Distributor 's sales
and service area.
B. Company recognizes that in the developing of some sales in Distributor 's sales
and service area, it will occasionally be necessary for Distributor to demonstrate or call on
parties located in another Distributor 's sales and service area. Calls of this nature are not to be
construed as open solicitation.
C. Service fees will be payable when Distributor or Distributor 's seller sells or
leases _____________________________ (name of product) to be based in another
Distributor 's sales and service areas.
D. To define what constitutes reason for paying of a service fee, the primary
consideration will be the principal base of the _________________________________ (name
of product) for the first __________ (number of days) days, not where the owner's legal
residence happens to be, as in some cases the owner could live in one Distributor 's sales and
service area and base his or her ______________________________ (name of product) in
another. In those cases where the _________________________________ (name of
product) is moving from location to location or it is located at a short range job during the first
_________ (number of days) days, the decision as to its principal base will be made by
Company if service fee is claimed. Basing of __________________________________ (name
of product) in the seller's sale and service area may be judged a chargeable service fee if
deliberate intent is indicated to avoid the spirit of the above.
E. Payment will be due Company within ________ (number of days) days after
delivery of the ______________________________ (name of product) to the purchaser.
Payment of this fee will be made to Company for distribution to the party or parties entitled to
the same. Service fees applying to various models shall be furnished to Distributor on the
commission schedule as provided in Section Seven . Involving purchasers in any claim by a
Distributor or Distributor s or sellers will be considered collusion, and settlement will be made
in favor of other parties involved. Company reserves the right of broad interpretation on service
fee claims, as it is the spirit of follow-through service to the customer and development of sales
which the Company is interested in protecting; and all decisions of Company will be final.
F. The recipient of a service fee payment will be expected to provide the owner with
the same service and general conveyance of good will as if such recipient had originally made
the sale.
11. Sales and Service Area Commission Adjustments
If Distributor or Distributor 's dealer or dealers sells wholesale or pays a commission
on the sale or lease of a new ____________________________________ (name of product)
to any Company or individual established in the business of selling ______________________
____________ (name of product) who is located outside of Distributor 's sales and service
area, this act will be considered a wholesale sales and service area infringement. The
Distributor making the sale agrees to pay Company the difference between Distributor 's
costs and manufacturer's suggested retail selling price on such a sale as liquidated damages
for improper selling, as determined by Company . Claims pertaining to wholesale violations shall
be reported to Company within _______ (number of days) days from delivery to the
purchaser. On all matters arising under this section, the decision of Company on the collection
and distribution of damage shall be final.
12. Definition of Used (Name of Product)
New Company ________________________ (name of product) will be considered
used and no longer subject to Sections Ten and Eleven at the expiration of _______ (number
of days) days from date of delivery to retail purchaser, or after operations by a Distributor or
dealer for a period of __________ (number of months) months and _______ (number of
hours) hours. New ________________________ (name of product) affected by a yearly
model change may be considered an obsolete model _________ (number of days) days after
Company begins regular production deliveries of succeeding models. An obsolete model is not
subject to service fee adjustment.
13. Factory Warranty
Company warrants each new _____________________________ (name of product)
manufactured by it to be free from defects in material and workmanship under normal use and
service, provided, however, that this warranty is limited to making good at Company 's factory,
any part or parts, which shall, within _________ (number of days) days after delivery of such
_________________________ (name of product) to the purchaser, be returned to Company
with transportation charges prepaid, and which on Company 's examination shall disclose to
Company's satisfaction to have been thus defective. This warranty is expressly in lieu of all
other warranties expressed or implied and all other obligations or liabilities on the part of
Company . Company neither assumes nor authorizes any other person to assume for it any
other liability in connection with the sale of its _______________________________ (name of
product) . This warranty shall not apply to any ______________________________ (name of
product) which shall have been repaired or altered outside of Company's factory in any way so
as, in its judgment, to affect its stability or reliability, or which has been subject to misuse,
negligence or accident.
14. Purchase and Supply of Parts
Distributor and Company recognize the importance to them, to the public, and to the
owners of Company's products, that its products be safe and operable in accordance with
Company's standards of manufacture. Distributor , therefore, agrees that Distributor will not
sell for use on Company's products any parts except those purchased from or having the
approval of Company . Distributor agrees at all times to keep on hand at Distributor 's place of
business a current supply of genuine factory parts sufficient to supply adequately the
requirements of the sales and service area assigned to Distributor . Distributor agrees to
maintain an adequate stock record system, and agrees on request, but not more than once in
each calendar year, to provide Company with detailed itemized inventories of the genuine
Company parts in Distributor 's stock. These records and inventories are for the purpose of
enabling Company to counsel with Distributor on the continuous and adequate stock of parts
consistent with the requirements of Distributor 's territory. Distributor agrees to confine
Distributor 's selling efforts to Distributor 's sales and service area. In case of parts or
accessory sales to a purchaser in another Distributor 's sales and service area, a maximum
discount of _______ (discount percentage) % shall be allowed to any operator or dealer.
15. Customer Complaints
Distributor will receive, investigate, and handle all complaints received from customers
or prospective buyers with a view to protecting the good will of Company and Distributor in the
sale of ___________________________ (type of product) products. Recognizing the
importance of owner good will, Distributor will make every reasonable effort to satisfy owners
of _______________________________ (type of product) products in the sales and service
area described in this contract and to satisfy all persons purchasing ______________________
(type of product) products, establish regular contact either by correspondence or personal
interview with such owners or purchasers. All complaints received by Distributor which cannot
be readily remedied shall be promptly reported to Company ; Company will then undertake to
remedy such complaints, and Distributor will be relieved of primary responsibility in this
connection.
16. Care of Owner
Recognizing that all parties to this Agreement have a mutual interest in maintaining
owner good will, that to retain this good will prompt and satisfactory service at reasonable costs
must be furnished each owner, and that the primary responsibility for furnishing this service
rests on Distributor , Distributor agrees:
A. To maintain a complete service department capable of repair and major overhaul
of all Company manufactured products and to purchase all special tools developed by
Company which Company deems essential.
B. To install Company flat rate charges for labor, as recommended and furnished
by Company .
C. To execute and deliver to each purchaser of a new _______________________
(name of product) , an owner's service policy on forms furnished by Company and to supply to
each owner an initial and ________ (number of hours) hours no charge inspection in
accordance with the __________________________ (name of product) owner's service
policy.
D. To supply at Distributor 's place of business, to each owner who purchases a
new ________________________ (name of product) from Distributor , warranty labor at no
charge.
E. To complete transfer of title to the owner in accordance with Federal and State
regulations in terms of sale.
17. Distributor is not Agent
For the protection of both Distributor and Company , the relationship created by this
agreement between Company and Distributor is not that of principal and agent, and under no
circumstances shall Distributor be considered an agent of Company .
18. Use of Trade Names
Distributor and Company desire to protect the public from confusion, uncertainty, or
misrepresentation. Therefore, Distributor agrees not to use in Distributor 's corporate, firm or
individual name, or allow it to be used by others in their corporate, firm or individual names,
insofar as Distributor has any power to prevent such use, the words _____________________
(Trade Name One) or _________________________ (Trade Name Two) , or any other name
adopted by Company for (name of product) , parts, accessories or service, and any words or
names or combination of words or names closely resembling such words will not be used. On
termination of a dealer by the Distributor , Distributor agrees to promptly work with the dealer
to discontinue the use of names, trademarks, signs, stationery, advertising or anything else that
might make it appear that the dealer is still handling Company products.
19. Distributor's Place of Business
Distributor agrees to maintain a place of business located near the trade center of
Distributor 's sales and service area. The selection of the location of the trade center must be
satisfactory to Company . The place of business shall be equipped with private sales offices,
display room or display facilities, parts department with display counters and adequate service
department satisfactory to Company .
20. Financial Conditions and Reports
A. Distributor recognizes the importance of a strong financial position and,
therefore, agrees to maintain adequate finances for satisfactory execution of this Agreement.
Distributor recognizes that Company , in the conduct of its manufacturing operation, in the
incurring of its commitment for raw materials, and in its employment of labor, needs, for the
intelligent direction of its affairs, up-to-date and accurate information on Distributor 's and
dealers' stock of new ____________________________ (type of product) and other used
________________________________ (type of product) and all Distributor 's and dealers'
retail sales. Therefore, Distributor agrees to cooperate with Company by reporting for
Distributor and Distributor 's dealers such information once each month on forms furnished by
Company .
B. Distributor recognizes the value of proper records and accounts and agrees to
keep up-to-date accounting systems and procedures. Distributor agrees to furnish Company
once each month a complete and accurate financial and operating statement with supporting
data covering the preceding month's operation, showing the true and actual condition of
Distributor 's business. Distributor agrees to submit this statement on forms supplied by
Company and Company agrees to hold these forms in strictest confidence. Company
undertakes to cooperate with Distributor in developing data and information for the purpose of
improving Distributor 's operations and profit possibilities through consultation and advice
based on the comprehensive study of the information furnished by Distributor .
C. It is recognized that the growth of both Distributor and Company is dependent
on increased sales. Therefore, Distributor agrees to use a sales managing system as
prescribed by Company , the reports to be supplied to Company for study purposes, to be
mailed not later than ______________________ (day of week) of each week.
D. Company agrees to prepare and supply consolidated sales management system
reports to Distributor based on reports supplied by Distributor s .
21. Terms and Title
Title to all Company products shall be and remain with Company until receipt by
Company of the full purchase price in United States dollars. In case Distributor makes
payment by check or by paying draft attached to bill of lading, Distributor shall pay the cost of
exchange, if any, and receipt from Distributor or Distributor 's bank of any check, draft, or
other commercial papers shall not constitute payment until Company has received cash in the
full amount.
22. Definition of ________________________________ (Name of Product)
The words ________________________ (Trade Name One) or ___________________
(Trade Name Two) , wherever used in this Agreement, shall be interpreted to mean all models
of ______________________________ (name of product) manufactured by Company and
offered for sale to the public.
23. Collection of Indebtedness
Company shall have the right to apply on the payment of any amount due Company
from Distributor any sum of money belonging to Distributor which may be in Company's
possession. Company may, at its option, collect any sum owing by Distributor to Company by
separate drafts or by including such sums in any draft covering the purpose of ______________
______________________ (name of product) . Distributor shall pay, with the amount of each
draft, all exchange and collection charges.
24. Change of Design
Company reserves full right to change the design of its products at any time it is
deemed necessary. Company is not to be held responsible for making such design changes on
_______________________________ (name of product) constructed and/or shipped by
Company prior to the incorporation of such design changes.
25. Termination without Advance Notice
While it is the desire of Company to establish lasting arrangements with Distributor , it
is recognized that certain conditions may arise in which it is impracticable for this agreement to
continue in effect. In the interest of friendly relations between Distributor and Company , it is
important that the circumstances be set forth so they may be thoroughly understood by both
parties to this agreement. Accordingly, it is agreed that this agreement shall terminate on the
expiration of the terms of this agreement, or immediately by its own force without notice from
either party in the event of:
A. An attempted assignment of this agreement by Distributor without Company's
written consent;
B. An assignment by Distributor for the benefit of creditors;
C. The admitted insolvency of Distributor ;
D. The institution of voluntary or involuntary proceedings by or against Distributor
in bankruptcy or under insolvency laws or for corporate reorganization, or for a
receivership or for the dissolution of Distributor ;
E. The admitted insolvency of any member of Distributor if a partnership;
F. The discontinuance of Distributor 's distribution and resale in Distributor 's sales
and service area of the product referred to in this agreement;
G. In case Distributor or any of Distributor 's officers or managers shall convert
any property or embezzle any money either of third parties or of Distributor in the case
of officers or managers; or
H. In case Distributor fails to secure a dealer's license or a renewal in those states
requiring dealer's licenses, or in case Distributor 's license is revoked or suspended.
Termination under this section shall not impose any liability on Company under the
provisions of Section 26 of this Agreement. It is further agreed by Distributor that Distributor
will immediately advise Company in writing of the occurrence of any event specified in this
Section. Company or Distributor may terminate this Agreement immediately by delivering to
the other party written notice of termination if the other party violates or fails to comply with any
term or provision of this agreement for which termination is not otherwise specifically provided
for in this section.
26. Termination by Notice
It is also recognized that certain other conditions may arise under which either party may
desire to terminate this Agreement by giving reasonable notice to the other party. Accordingly,
this Agreement may be terminated at any time on not less than _________ (number) d ays'
written notice by Company or on not less than _________ (number) days' written notice by
Distributor , but either of these periods may be reduced by mutual written consent of
Distributor and Company . Termination under the provisions of this section by Company shall
not be effective unless the notice bears the written approval of the _______________________
( title of officer) Company .
27. Termination – Sums Due Company
On termination of this Agreement, Distributor will immediately pay to Company all
sums due Company at the time of the termination.
28. Termination – Unfilled Orders
Termination of this Agreement shall operate as a cancellation of all unfilled orders for
___________________________________ ( name of product) , parts and accessories.
Company shall, within _______ (number) days, refund any deposits placed on such unfilled
orders.
29. Termination – Signs, Names, Trademarks, and Trade Names
A. On termination of this Agreement, Distributor agrees that Distributor will
immediately discontinue the use of names, trademarks, signs, stationeries, advertising or
anything else that might make it appear that Distributor is still handling Company products.
Company agrees to buy and Distributor agrees to sell, the outdoor sign purchased by
Distributor from Company under Section 9 of this Agreement. It is recognized by Company
and Distributor that the prompt discontinuance of the use of this sign, other signs, names,
trademarks, stationery, advertising, and the like, will be beneficial to both Company and
Distributor on termination of this Agreement.
B. It is further recognized by Company that certain costs may be incurred in the
discontinuance. Therefore, it is agreed by Distributor and Company that Company shall make
the following payments:
1. $______________ (d ollar amount) for discontinuance of all items above
if accomplished within _________ (number) days after the date of termination.
2. $ ________________ (d ollar amount) for return of the sign mentioned
above if made within _________ (number) days after the date of termination.
3. Failure to discontinue use of names, trademarks, signs, stationery,
advertising or anything else that might make it appear that Distributor is still
handling Company products within the __________ (number) day period
specified shall relieve Company of its responsibility to make the above-stated
payment but shall not relieve Distributor of Distributor 's obligation to comply
with this section of the agreement.
4. Failure to return the sign within the __________ (number) days specified
shall not relieve Distributor of Distributor 's obligation to return the sign but shall
relieve the Company of its obligation to make the above payment. For purposes
of clarification, delivery of the sign to a transportation agency will constitute date
of return to Company . The transportation charges on the shipment of the sign to
Company will be prepaid by Distributor ; and if the sign is not in good repair and
in operating condition, Distributor agrees that labor and material costs to put the
sign in good repair and in operating condition may be deducted from the selling
price .
30. Termination – Parts
On termination of this Agreement, Company , at its option, may buy and Distributor
agrees to sell within __________ (number) days after the effective date of termination, at the
same price paid by Distributor to Company , less __________ (handling percentage) % for
handling, the ____________________________ (type of part) part purchased from Company
for current models that are new and re-saleable which Distributor has on hand, when returned
to Company transportation charges prepaid.
31. Change in Prices
A. Company shall have the right, at any time, without notice, to reduce or increase
its list price of any of its current models of __________________________ (name of product) .
Should Company make any such reduction or reductions, Company will refund or allow a
proportionate amount on the price paid by Distributor for all new and unused ______________
___________________ (name of product) of such current models as may have been
purchased, and paid for, by Distributor from Company during the _____ ( number of months)
months immediately preceding the date of such reduction and which are in Distributor 's stock
unsold at the time such reduction may be made. Distributor shall be entitled to the amount
equal to the difference between the price Distributor may have paid for any such __________
__________________ (name of product) and the amount Distributor would have paid for the
same if sold to Distributor in accordance with the terms of this Agreement after such reduced
price has become effective.
B. The above-mentioned refund or allowance will not be made on any ___________
_____________________ (name of product) used by Distributor for demonstration purposes,
nor will any such refund or allowance be granted unless claim is made by Distributor in writing
within _______ (number) of days from the date such reduction becomes effective, and all such
claims must be supported by evidence satisfactory to Company .
C. This refund or allowance as set forth above and under the same conditions shall
likewise be made by Distributor on all new and unused _______________________________
(name of product) in the stock of Distributor 's dealers operating under a _________________
________________ (Name of Company) Distributor 's dealer agreement, as a ____________
______________________ (Name of Company) dealer. Such refund or allowance will be
made to Distributor who agrees to make a like refund to the dealer for the dealer's
proportionate share.
D. If the __________________________________ (name of product) is covered
by a mortgage, Company reserves the right to pay a proportionate share of the difference in
price to the holder of the mortgage.
E. Should the Company produce at any time, after the date of this agreement, a
new or different model of ______________________________ (name of product) than those
above set forth, Distributor shall have no claim for any refund on any ____________________
_____________________ (name of product) previously purchased by Distributor under this
agreement, such reductions only applying to models of ________________________________
(name of product) actually in existence at the date of such reduction and whose price may be
reduced by Company as provided in this agreement.
38. Term
This Agreement shall continue in force and govern all relationships and transactions
between the parties until _____________________ (termination date) .
39. Force Majeure
Neither Company nor Distributor will be liable for failure to perform its part of this
agreement when the failure is due to fire, flood, strikes or other industrial disturbances,
inevitable accident, war, riot, insurrection or other causes beyond the control of the parties.
WITNESS our signatures as of the day and date first above stated.
_____________________________ __________________________
(Name of Company) (Name of Distributor)
By: ______________________________ By: _____________________________
_________________________________ ________________________________
(P rinted name & Office in Corporation) (P rinted name & Office in Corporation
_________________________________ ________________________________
(Signature of Officer) (Signature of Officer)
