You may already know whether you require a commission agent, or prefer a distributor who can stock products locally in the market. As the export of services from the UK has expanded rapidly in recent years and there is no tangible product to stock, so an agent is often all that is required.
However, it is worthwhile to examine the role and types of agents and distributors, as these terms are often used loosely. A distributor may refer to himself as an agent and vice versa, so it can be confusing.
- An agent does not have to buy the product or service from the supplier (or principal) and does not have title to (or own) the goods or service.
- The role of the agent is to find customers for their principal in return for a commission payment on any sales they arrange.
- Once the agent has effected an introduction, the supplier/principal will then sell the goods/services direct to the consumer.
- An Agent does not accept financial liability.
The Distributor (or The Re-Seller)
- Purchases products from a UK exporter/supplier and therefore has “title” to the goods purchased.
- The distributor then sells the goods on to the final customers having added his profit to the price.
- The selling prices and terms of sale are determined by the distributor.*
- Buys/sells on own account in defined region
*Fixing the resale price is illegal in the UK and many other parts of the world. The most you can safely do is to have a recommended retail price (RRP).
I have a supplier who is an exporter, then I´ve got a distributor in another country, what will my role be in this case? mediator? Also, how do I make sure they wont kick me out once they start making business?
Hi there, many thanks for your question. Our author Simon Bedford had the following response for you: “It depends on what is in the agreement; if your supplier knows who your end customer or distributor is, then there is always a possibility at some future point that they may try and go direct.”
Co-author and lawyer Giles Dixon comments:
“What does your agreement with the supplier say about your role – e.g. does it cover sales to distributors in other countries? If so you might want to have a clause designed to ensure that all sales to the country/ies where you already have distributors are covered by the agreement”
Our book talks through the relationships you can have with suppliers and distributors and there are some sample contracts in there as well. You can download it as a PDF or order a print copy – just follow the links on this site.