Escolar Documentos
Profissional Documentos
Cultura Documentos
Glen Balzer
Management & Forensic Marketing Consulting on Sales Channel Relationships&Contracts
http://www.neweraconsulting.com/sixrules.htm 1/6
9/20/2016 SixRulesforNegotiatingaBetterDistributionAgreement|GlenBalzer
management can spend its time on the most important issues: developing and to Organize a Sales Team
expanding the relationship between the supplier and distributor. Here are six rules to
follow when negotiating that next distribution agreement. Distributors Must Manage
Supplier Relationships
1. Balance Launching a Sales
Balance in a distribution agreement ensures that neither party holds unfair power Presence in a Foreign
over the other. Both parties should have the opportunity to terminate the agreement Market
under similar conditions. If one party may terminate the agreement on 60 days notice
without penalty, the other party should have the same opportunity. Problem-Free Distribution
Agreements
An experienced party rarely inserts imbalance into a distribution agreement. Parties
are sometimes not aware of bias while negotiating the contract. When problems arise Proven Techniques
in the relationship between the distributor and the manufacturer, both parties are Improve Supplier
likely to study the agreement in detail. Once either party detects bias in the
Relationships
agreement, it serves to increase friction in the relationship. That unnecessary friction
works against sales and sales growth. One-sided agreements are a ticking time bomb. Six Rules for Negotiating a
Avoid explosions easily by ensuring that the agreement contains no clause that favors
Better Distribution
one party over the other.
Agreement
After a distributor and supplier sign a distribution agreement and begin building a Tips for Improving
relationship, both parties must learn and truly understand the strengths and Supplier Relationships
weaknesses of their partners. If inadequate due diligence was performed, parties will
discover new problems with their partners. Too often, those problems come as an
http://www.neweraconsulting.com/sixrules.htm 2/6
9/20/2016 SixRulesforNegotiatingaBetterDistributionAgreement|GlenBalzer
one partner attempting to gain advantage over the other partner by inserting a bias
into the agreement favoring the party with greater experience.
There are several methods by which to level the playing eld during negotiation. First,
solicit a model agreement from your industry's distributor association. Many
distribution associations provide a model agreement free of charge or at modest cost
to their members (National Electronic Distributors Association, Material Handling
Equipment Distributors Association, etc.). The model is a good baseline from which to
compare the agreement under negotiation.
Second, alert your network of friends in the industry. Although it is unlikely that a
direct competitor would lend a copy of its distributor agreement, friends at indirect
competitors usually have no fear of sharing an agreement that has proven to be
problem free.
When a legal professional and not a seasoned sales manager review a distribution
Home Articles Speaking Topics Glen Balzer CV Contact
agreement, the resulting document can be legally acceptable, but commercially
ineective. When a seasoned sales manager and not an attorney review a contract,
the resulting agreement can be commercially eective, but legally unacceptable.
Hence, when only two eyes review a distribution agreement, problems can arise.
When, however, four eyes review an agreement, two from an attorney and two from a
seasoned sales manager, the probability of a legal skirmish upon termination
diminishes greatly. Four eyes are better than two.
http://www.neweraconsulting.com/sixrules.htm 4/6
9/20/2016 SixRulesforNegotiatingaBetterDistributionAgreement|GlenBalzer
Termination for cause proceeds smoothly so long as both parties agree to the source
and responsibility of the cause, and agree to dissolve the agreement and relationship.
Unfortunately, it's often dicult to agree to cause in the real world without protracted
discussion, sometimes involving attorneys. Extended discussion consumes
management time. Involvement of attorneys consumes both management time and
money. Save time and money, while minimizing frustration by including a termination
for convenience clause.
Conclusion
Write the distribution agreement in a balanced fashion. Be sure to perform adequate
due diligence. Allow for annual termination with semiautomatic renewal. Compare the
next distribution agreement with other proven contracts. Have the contract reviewed
by both a seasoned sales manager
Home andArticles
an attorney. Include
Speaking the opportunity
Topics for CV
Glen Balzer both Contact
parties to terminate for convenience.
This article rst appeared in the November 2009 issue of Industrial Distribution magazine.
Glen Balzer is president of New Era Consulting, a marketing and sales consulting rm. He
has created, upgraded, and managed marketing and sales organizations for distributors
http://www.neweraconsulting.com/sixrules.htm 5/6
9/20/2016 SixRulesforNegotiatingaBetterDistributionAgreement|GlenBalzer
and suppliers around the world during the past 30 years. He has integrated divisions of
companies upon merger and acquisition. Contact him at www.neweraconsulting.com
http://www.neweraconsulting.com/sixrules.htm 6/6