If you want to expand sales of products or services, but do not want to do this yourself, a range of alternatives is available. Depending on your business format, management resources, capital and the local knowledge that you have available; agency, distribution, franchise, licensing and merchandising, offer alternative ways of reaching new customers in new markets. After you have reviewed the options, face-to-face discussions with a FLINN lawyer can help clarify the strategy that will best help you to achieve your goals.
An agent is a person who has the power to negotiate (and, in some cases, conclude) contracts on behalf of another person for the purchase or sale of goods or services. The agent is considered to form a part of the business organisation of the principal – so that the agent does not independently bear financial or commercial risks for the activities undertaken. In return for doing so, the agent is typically paid a commission on the sales made. The agency relationship is not without its potential pitfalls. An indemnity may need to be paid to an agent at the end of the agency contract. Moreover, there is a formal requirement (under both Belgian national and European law) that the party terminating the agency should send the required notice of termination in writing – with the notice period ending at the end of a calendar month.
FLINN lawyers are experienced in advising and drafting agency agreements and negotiating the termination arrangements when an agency agreement ends.
Appointment of a distributor can also be a useful way of penetrating new markets. One essential difference between distribution and agency is the independence of the distributor who is typically required to make investments in the distributorship and to purchase its stock and who make sales in its own name and at its own risk.
Distribution relationships come in several flavors: exclusive, where the distributor is given exclusive rights to sell within the contract territory; sole – where the distributor gets exclusive rights, subject to the manufacturer/provider retaining rights to make certain direct sales itself (often for established customers); non-exclusive – where one or more distributors may be appointed for the same contract territory; selective – for sophisticated or prestigious products – where admission to the distribution network is subject to achieving certain objective standards including expertise in relation to the products and to the premises where the products are presented.
FLINN lawyers are very experienced with all types of distribution arrangements and can help you choose the contract ‘flavor’ that will suit you best.
Parties within a franchise network aim to establish a long term ‘win-win’ relationship. Entering a franchise arrangement implies closer links between the franchisor and its franchisees than those in a standard distribution arrangement.
Belgian law on pre-contractual information for commercial partnership arrangements, requires specific information to be given to a prospective franchisee before the franchise contract can be concluded and fees paid. It prescribes a mandatory one-month cooling-off period before contract signature. (Similar rules apply in other European jurisdictions and, for example, in the USA, Canada and Australia.)
The existence of a franchise network strives to multiply success – so that an individual franchisee’s success reflects positively on the other members of the network. However, even if the franchise agreement states that the franchisee is an independent contractor: given the franchisor’s obligation to assist the franchisee, there can be a fine line between contractual obligations and potential interference with the franchisee’s business.
As well as accompanying you through the negotiations and contractual arrangements – whether they are for the establishment of your master franchise or for the purchase of your first franchise outlet – FLINN lawyers are also aware of the tensions that can arise in franchise networks. We are here to help you solve any such problems in a commercial and cost effective manner.
- Licensing & Merchandising
Establishing and maintaining a brand is a lifetime’s work. The more successful a brand is – the more susceptible it becomes to attack through counterfeit, piracy or other unauthorised attempts to trade on the good-will associated with the brand. FLINN lawyers’ experience of advising on infringements of your licensing and merchandising rights, issuing cease and desist procedures and seizure of goods can assist you to deal with such threats. Each and every specific situation requires an appropriate strategy.
As part of the services we offer, our specialists, working with our ever-expanding network of professionals, can offer you top-notch tax advice as required to optimize your organization’s tax situation. Tax planning is an important part of business planning and we can help you with this too.
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