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Having a good product does not automatically lead to company success. Only in combination with well-organised distribution channels, will you be able to generate adequate revenues.
No matter which distribution form you choose, it is important to have precise contractual provisions about the mutual obligations and the respective consideration.
If you, as a manufacturer, cooperate with commercial agents, you will have to make sure that the preconditions for commission payments and their assessment basis are accurately defined. Whether or not taxes, transport costs and potential discounts are part of the assessment basis can have a significant effect on the commission payments and, eventually, on the amount of a potential statutory severance payment (“Ausgleichsanspruch”).
If you have a network of independent dealers, you should avoid having too many rights and possibilities of interfering with the dealers’ marketing activities. Otherwise the dealers might acquire a right to severance payments, similar to the ones that commercial agents have.
Another distribution form is franchising, where one entrepreneur, the franchisor, provides another entrepreneur, the franchisee, with the opportunity to make use of the franchisor’s (well-established) business concept. In international distribution, franchising enables the franchisor to develop new markets for his/her products or services with only very few risks. In particular, the entrepreneurial risk is borne by the franchisee. The franchisee, on the other hand, can rely on a well-established and successful concept without having to develop his/her own business idea from scratch.
Franchising is not explicitly mentioned in statutory law. Instead, it is governed by a whole range of legal sources including the laws on commercial agents, competition, trademarks and rentals as well as the civil and entrepreneurial codes. We assist you in extracting the relevant provisions of all of these legal sources and consolidating them in a contract. Furthermore, we will help you to define the “franchise package” and find a fair solution for your consideration.
Our services around distribution law
- Advice in connection with intermediaries such as commercial agents, independent dealers and franchisees
- Drafting and examination of distribution contracts
- Pursuing and defending against claims for severance payment
- Handling cases of unfair competition