At our company, an export/import firm in Vancouver, BC, we were thrilled to receive the contact agreement for product distribution of a well-known worldwide company.
We weighed the advantages and disadvantage of the contract and partnership and also consulted our lawyer. Getting a full understanding of the entire contract took time and money, but it was well worth the effort.
We learned that the contract would restrict our margins and subject us to an audit at our expense. It would restrict our freedom to order the products and require us to cover expenses such as warehousing, market launch, advertising, promotions and any product disposal costs. Worst of all, we would be required to buy their products but we would not have full ownership after purchasing them.
There were provisions in the contract starting that we were not allowed to use our distributors or sub-distributors. However, our network of distributors and sub-distributors are important to our business. They enable us to reach specific markets where we have no offices or warehouses of our own. We have strong relationships with them and we know that their success is important to our success.
In the end, we returned to the large company to renegotiate the terms of the contract. We made our concerns clear and worked to find a fair solution that provided benefits for both parties and that aligned better with the interests of our network of existing partners.
Francisco Lingad, ANCL Export Import Canada, LLP, Vancouver, BC, CYBF mentor