Free distributor agreement template

What a distributor agreement does, and what it does not do

Two jobs. It appoints the distributor and defines the commercial boundaries of that appointment, and it sets the standing terms that apply to every future sale between the parties. What it does not do is commit anyone to a transaction. United States courts have generally treated an agreement like this as a framework rather than a contract of sale, because it does not fix the quantity or price of any specific goods. The sales themselves happen downstream, each time the distributor sends a purchase order and the supplier accepts it or ships against it. That split has a practical consequence people miss. If the standing terms and the paperwork on an individual order disagree, you need to know which wins, and the only reliable way to know is to say so. This template says it: the agreement governs every accepted order, and the only things an individual order can add are quantities, part numbers, prices, delivery dates and the ship-to address. Without that sentence you get a battle of the forms every time somebody's procurement system staples its own standard terms to a purchase order.

Distributor, consignee, or sales rep: which contract you actually need

People use these words loosely and then sign the wrong document. The test is simple: follow the title to the goods and follow who carries the risk.

• A distributor buys the goods. Title passes to it, it pays whether or not the goods sell, and it earns the margin between wholesale and resale. Use this template.
• A consignee never owns the goods. The supplier keeps title until the item sells, the consignee takes an agreed commission and sends unsold stock back. Different risk, different document, and it needs a security interest and a UCC filing to protect the supplier against the consignee's creditors. Use the consignment agreement instead.
• A sales representative or agent does not buy anything either. It introduces customers, the supplier contracts with and invoices the customer directly, and the rep is paid commission. Use the sales commission agreement.
• A one-off sale of specific goods at a specific price is a purchase agreement, not a distribution arrangement. Nothing continues after the goods and the money change hands.
• A single order placed under a standing arrangement is a purchase order. It lives inside a distributor agreement, not instead of one.

How to fill it in, clause by clause

Work through the schedules first. Most of the fights in a distribution relationship come from a blank or vague schedule, not from the clauses.

• Schedule A is the commercial core: the product list with part numbers and pack sizes, the price list with its currency, and the distributor discount with any volume tiers and the conditions attached to each.
• Schedule B is the territory, and it has more parts than people expect. Define the geography, say in plain words whether the appointment is exclusive, then list what the supplier is holding back: named house accounts, national chains, government buyers, its own website.
• Schedule B also covers channels. Say whether the distributor can list the products on Amazon or run its own webstore. An online listing reaches everywhere, which makes a territorial restriction meaningless unless you have decided the question.
• Schedule C holds the minimum purchase commitment, the forecast cadence, the trade shows the distributor is expected to attend and the reports it owes. Set the minimum against a real number you both believe, not an aspiration, because missing it has consequences.
• Schedule D lists the trademarks and the brand usage rules. Schedule E is the supplier's warranty, the warranty claim procedure and the labor and freight allowance for warranty work. Schedule F is insurance, including product liability limits and who gets named as an additional insured.
• Schedule G is the inventory statement used for the termination buy-back. Nobody fills this in at signing, but having the form agreed in advance saves an argument at the worst possible moment.
• Then do the bracketed numbers in the clauses: payment days, inspection window, price-change notice, termination notice and cure periods, the run-off period and the buy-back percentage.

Exclusivity is the clause people get wrong

Exclusivity is the most valuable thing a supplier can give a distributor and the hardest thing to take back. The mistake is treating it as a single yes-or-no question. It is three questions, and this template asks all three.

• Does the supplier promise not to appoint anyone else in the territory? Most people stop here.
• Does it also promise not to sell there itself? That is a separate promise, and a distributor that gets only the first one will eventually find the supplier competing with it.
• What is carved out? Reserved accounts are where exclusivity disputes usually begin. The supplier has a national chain it has supplied for fifteen years, or a direct webstore, or a government contract, and nobody wrote it down. Name them in Schedule B before signing.
• One more point, in the supplier's favor: tie exclusivity to performance. In this template it survives only while the distributor meets the minimum purchase commitment, and a miss lets the supplier convert the appointment to non-exclusive instead of having to terminate outright.
• Antitrust law is a background constraint here, not a bar, but keep two situations apart. A supplier assigning territories to its own distributors is a vertical restraint, judged under the rule of reason since Continental T.V. v. GTE Sylvania, 433 U.S. 36 (1977), so a promise not to appoint anyone else is rarely the problem. Distributors agreeing territories among themselves is horizontal, and the Supreme Court called that kind of arrangement a naked restraint of trade in United States v. Topco Associates, 405 U.S. 596 (1972). Never let your distributors negotiate their boundaries with each other.
• The clause worth a second look is the mirror image, further down the template: the promise that the distributor will not carry a competing line. That is the restraint section 3 of the Clayton Act, 15 U.S.C. 14, actually targets, since it reaches a sale made on the condition that the buyer shall not use or deal in the goods of a competitor of the seller. Between parties without market power it is rarely an issue; a supplier with real market share should take advice.

The minimum purchase commitment, and the best-efforts duty the UCC adds for free

A minimum purchase commitment is how a supplier makes exclusivity earn its keep. Two drafting points. Count purchases when goods ship, not when they are ordered, or a distributor can hit its number with orders it later cancels. And give yourself a graduated response, because termination is a blunt and expensive answer to a distributor that came in ten percent short in a bad year. This template lets the supplier convert exclusivity to non-exclusive, shrink the territory, pull a reserved channel, or treat the shortfall as a breach. Separately, there is an obligation here that applies whether or not you write it down. UCC 2-306(2) provides that a lawful agreement for exclusive dealing in the kind of goods concerned imposes, unless otherwise agreed, an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale. Read that twice, because the duty runs both ways. A supplier that grants exclusivity and then cannot fill orders, or quietly starves the distributor of stock while it builds a direct channel, is the one in breach.

What you can and cannot say about resale prices

The distributor owns the goods, so it sets its own resale prices. A supplier can publish a suggested price, and this template leaves the distributor free to sell above, at or below it. Going further than a suggestion is where it gets complicated, and the complication is that federal and state law no longer agree. Federally, a minimum resale price agreement is not automatically unlawful. The Supreme Court held in Leegin Creative Leather Products v. PSKS, 551 U.S. 877 (2007), that such agreements are judged under the rule of reason, and it had reached the same conclusion about maximum resale prices a decade earlier in State Oil Co. v. Khan, 522 U.S. 3 (1997). State law is a different matter. Maryland amended its antitrust statute in direct response to Leegin, effective 1 October 2009, so that under Md. Code, Commercial Law 11-204(b) a contract, combination or conspiracy that establishes a minimum price below which a retailer, wholesaler or distributor may not sell a commodity or service is an unreasonable restraint of trade. The provision names distributors specifically. Other states have reached similar results through their own antitrust acts and enforcement positions. The practical upshot: a pricing policy that is lawful in one state can be per se unlawful in another, so this is a question for a lawyer who knows the states you sell in, not a clause to copy from a template.

Discounts and rebates: Robinson-Patman is being enforced again

If you sell to competing distributors or dealers, your discount schedule is a legal document. The Robinson-Patman Act, 15 U.S.C. 13, makes it unlawful for a seller in commerce to discriminate in price between different purchasers of commodities of like grade and quality where the effect may be substantially to lessen competition or to injure competition. For about a generation this was treated as a dead letter, and plenty of discount schedules were built on that assumption. That has changed.

• Differentials that make only due allowance for differences in the cost of manufacture, sale or delivery are expressly preserved, so a genuine volume or freight efficiency is defensible. A tier that exists because a big customer asked for it is not.
• Cost justification is narrower than people think. It lives in section 13(a) and answers a claim about price. It does not answer a claim about promotional allowances, services or facilities, because sections 13(d) and 13(e) require those to be available to all competing purchasers on proportionally equal terms, with no cost-based escape.
• Meeting a competitor in good faith is broader. Section 13(b) lets a seller rebut a case about price, or about services and facilities, by showing the offer was made in good faith to match a competitor.
• The buyer is exposed too, which distributors rarely realise. Section 13(f) makes it unlawful to knowingly induce or receive a price discrimination the Act prohibits, so a distributor pressing for a deal it knows competitors cannot get is not a bystander.
• The enforcement picture moved recently. The Federal Trade Commission sued Southern Glazer's Wine and Spirits in December 2024, alleging it charged small independent retailers far more than large chains, and on 2 October 2026 announced a proposed stipulated consent decree resolving the case, its first relief under the Act since 2000. The decree was pending when this page was written and has no force until a court enters it, so check where it has got to.
• The practical test for Schedule A: can you explain, on cost or competitive-response grounds, why each tier and allowance is where it is? Rebates, advertising allowances and freight support all count.

How a distribution deal turns into a franchise by accident

This catches people, and the consequence is serious: an unregistered franchise sale can mean rescission, damages and regulatory exposure. Whether something is a franchise does not depend on what you call it. The Federal Trade Commission's Franchise Rule, 16 C.F.R. 436.1(h), defines one by three elements that must all be present.

• The distributor gets the right to distribute goods associated with the supplier's trademark. Almost every distribution deal satisfies this.
• The supplier exerts or has authority to exert significant control over, or provides significant assistance with, the distributor's method of operation. Mandatory training, required systems, territory and account control, approved premises and detailed operating standards all push toward this.
• The distributor makes a required payment. This is the element an ordinary distribution deal usually fails, and the reason is worth knowing: the Rule's definition of a required payment excludes payments for the purchase of reasonable amounts of inventory at bona fide wholesale prices for resale. Buying stock at wholesale is not a franchise fee.
• So the risk is not the appointment itself, it is what you bolt onto it. An appointment fee, a compulsory training charge, a mandatory marketing contribution, a required purchase of signage, software or a starter kit, or a stocking order well beyond reasonable inventory can all supply the third element.
• Two exemptions are worth checking. Under 16 C.F.R. 436.8(a)(1) the Rule does not apply where required payments made from before to within six months after the business opens total less than $735. And 436.8(a)(2) exempts a fractional franchise, which 436.1(g) defines as a relationship where the distributor or its officers have more than two years of experience in the same type of business and the parties reasonably expect sales from the relationship to stay at or below 20 percent of the distributor's total sales in the first year. That second one fits an established distributor adding a line. Note also that 436.8(b) re-adjusts these dollar thresholds every fourth year, so confirm the current figure. Several states run their own franchise registration and relationship statutes with their own definitions, some broader than the federal one, and a federal exemption is not a state exemption.
• Be honest about this template, too. It asks the distributor to keep a suitable place of business, employ and train staff, attend named trade events, follow brand usage rules, submit advertising for approval, accept inspections, report monthly and avoid competing products. That is a fair amount of control over a method of operation, so the second element is arguably present. What keeps an ordinary use of this template outside the Rule is the third element, because the only money flowing to the supplier is the wholesale price of goods bought for resale. Guard that, and read the control clauses with it in mind.

Who gets sued when a product injures somebody

The distributor does, along with the manufacturer. Strict product liability reaches sellers throughout the chain of distribution, so a business that did nothing but take delivery of a sealed carton and ship it onward can still be a defendant. A number of states soften this with an innocent-seller or sealed-container statute, but read the exceptions before relying on one. Tennessee's is a good illustration. Under Tenn. Code 29-28-106 a seller who did not manufacture the product generally cannot be held liable, unless it exercised substantial control over the aspect of the design, testing, manufacture, packaging or labeling that caused the harm, or altered or modified the product, or gave an express warranty, or the manufacturer has been judicially declared insolvent, or the manufacturer is not subject to service of process in the state. Two of those exceptions are inside your control and both appear in this template. If the distributor writes its own warranty on top of the supplier's, it has given an express warranty and the shield is gone, which is why this agreement requires the supplier's warranty to pass through unchanged. And if the manufacturer is overseas with no United States presence, the service-of-process exception means the distributor is the only defendant a plaintiff can reach. An importer of goods from a foreign manufacturer should treat the supplier's indemnity and the insurance certificate under Schedule F as its actual protection, confirm the policy responds in the United States, and get itself named as an additional insured.

The trademark license, and how a supplier can lose its own brand

A distributor reselling genuine goods the supplier put on the market generally does not need a trademark license to resell them at all. So what is the license for? Advertising, packaging, signage, websites and trade show material, where the distributor is using the mark itself, not just passing on branded goods. That is worth getting right, but the bigger risk sits on the supplier's side of the table. A license with no quality control is called a naked license and it can cost the licensor the mark. Under the Lanham Act a licensee's use counts for the owner only where the owner controls the nature and quality of the goods, which is what 15 U.S.C. 1055 and the definition of a related company in 15 U.S.C. 1127 require, and the same section treats a mark as abandoned where the owner's own acts or omissions cause it to lose its significance as a mark. In Barcamerica International USA Trust v. Tyfield Importers, 289 F.3d 589 (9th Cir. 2002), a wine trademark owner that left quality control entirely to others lost its rights in the mark. The approval, inspection and brand-rules provisions in this template are not red tape. They are the evidence that control existed.

Territory leaks, marketplaces and the gray market

Territorial restrictions have a hole in them, and the hole is the internet. A listing on a marketplace is visible everywhere, so an appointment for one state and an unrestricted Amazon storefront are not compatible. Decide the channel question in Schedule B instead of discovering it later. Beyond channels, goods bought cheaply in one market and resold into another are a recurring problem for brands, and the border helps in narrower circumstances than suppliers expect. Two conditions come first: the goods have to be foreign-made, and the mark has to be recorded with Customs. Given that, 19 C.F.R. 133.23(a) restricts three categories.

• Goods whose mark was applied by a licensee independent of the United States owner are restricted whether or not they differ from the authorized version at all.
• So are goods whose mark was applied under the authority of a foreign owner who is not the United States owner.
• Goods whose mark was applied by the United States owner, or by a company under common ownership or control with it, are restricted only where Customs has determined them to be physically and materially different from the authorized version.
• That third distinction decides most real cases. A brand whose overseas product comes from its own subsidiary needs a material difference to get help at the border. A brand whose overseas product comes from an independent licensee does not.
• Restricted goods are denied entry and detained. The importer has 30 days from presentation for examination to establish an exemption, and otherwise the goods are seized and forfeiture proceedings begin. Goods in the third category can be released if labeled with the text the regulation prescribes, stating that the product is not authorized by the United States trademark owner for importation and is physically and materially different from the authorized product.
• None of this touches diversion from one state into another. So territory discipline still has to be a contract problem: no deliberate out-of-territory solicitation, no sales to buyers you know intend to divert, and no tampering with serial numbers, batch codes or packaging that would destroy your ability to trace the leak.

Dealer-protection statutes can outrank your contract

This is the part of distribution law that surprises suppliers most, and the exposure is real money. A number of states protect distributors and dealers by statute, regardless of what the agreement says and regardless of whether anyone used the word franchise. Check the law of the territory before you rely on your own notice period. This template contains a clause saying mandatory local law prevails, which is honest drafting, not a loophole.

• Wisconsin's Fair Dealership Law, Wis. Stat. ch. 135, is the one to know, and its scope is wider than people assume. Under 135.02(3) a dealership is an agreement granting the right to sell or distribute goods or services, or to use the grantor's trade name or mark, where there is a community of interest in the business. Those are alternatives, not a checklist, so a plain distributor that never got a trademark license is still covered.
• Community of interest means a continuing financial interest in the operation of the business or the marketing of the goods.
• The Wisconsin statute requires good cause to terminate, 90 days' prior written notice stating all the reasons, and 60 days for the dealer to cure, with the notice void if the dealer cures. Nonpayment gets a shorter 10-day cure and insolvency needs no notice. A wronged dealer can get an injunction, damages and attorney fees.
• Section 135.025(3) says the effect of the chapter may not be varied by contract, so the protections are not waivable, and Wisconsin courts have refused to let a choice-of-law clause displace them for a dealer operating in the state.
• Puerto Rico's Law 75 of 1964, 10 L.P.R.A. 278 and following, goes further. A dealer's contract is effectively renewable at the dealer's option unless the principal has just cause, and the damages formula accounts for the goodwill of the business and the dealer's profits.
• Industry statutes add mandatory inventory repurchase at fixed prices. Iowa Code 322F.3, covering equipment dealers, requires the supplier to pay 100 percent of the net cost of unused complete equipment in new condition bought in the 24 months before notice, 90 percent of the net price of repair parts, and a further 5 percent of the net price on returned parts for the dealer's handling, packing and loading, unless the supplier does that work itself.

Cross-border distribution: a treaty applies unless you exclude it

If the supplier and distributor are in different countries, there is a good chance an international sales treaty governs the orders without either party realising it. The United Nations Convention on Contracts for the International Sale of Goods applies by its own terms, under Article 1(1)(a), to contracts of sale of goods between parties whose places of business are in different Contracting States, and the United States is one of more than ninety. Article 6 lets the parties exclude it, but here is the trap: choosing the law of a Contracting State does not exclude it. A clause saying the agreement is governed by New York law leaves the Convention in place, because the Convention is part of New York's law. The exclusion has to be express. There is a second wrinkle specific to distribution. United States courts have generally held that a distribution agreement is a framework and not a contract of sale, so it sits outside the Convention, while the individual purchase orders placed under it can sit inside it. That means an exclusion aimed only at the agreement can miss the sales. The governing-law clause in this template excludes the Convention from the agreement and from any sale of products under it. Also name the edition of any Incoterms rule you use, because the allocation of carriage, insurance and risk has changed between editions.

Ending it, and what happens to the stock

Termination is where a distribution relationship generates litigation, usually because the distributor is sitting on inventory it can no longer sell under a brand it no longer represents. Deal with three things explicitly. First, notice. A clause allowing instant termination with no notice is weaker than it looks, because UCC 2-309(3) provides that termination by one party, other than on the happening of an agreed event, requires reasonable notification, and that an agreement dispensing with notification is invalid if its operation would be unconscionable. Pick a period you can defend. Second, a run-off period, so the distributor can sell down stock it already owns and use the marks to the extent needed to do so. This template suspends the run-off where termination was for breach of confidentiality or the anti-corruption clause, which is the right place to draw that line. Third, the buy-back. This template makes it the supplier's election, exercisable within a set window after the distributor's inventory statement, and if the supplier lets the window pass the distributor is free to sell the stock. That still favors the supplier; a distributor negotiating should push to make the buy-back mandatory, and should check whether a dealer statute already makes it mandatory. Set the percentage of the price paid, the age limit on returnable stock, who pays freight, and agree the inventory statement form in advance. Also worth saying plainly: termination does not wipe out obligations that are already due or still unperformed, which is why this template says so instead of relying on a list of surviving clauses that always ends up missing one.

When to involve a lawyer

Most of this template you can fill in yourself. Five situations are worth paying for advice on. If the distributor will operate in Wisconsin or Puerto Rico, or in an industry with its own dealer statute such as farm and construction equipment, alcohol, motor vehicles or petroleum, get the termination and non-renewal terms reviewed before signing, because the statute will beat your contract. If you plan to control resale prices instead of suggesting them, take advice on every state you sell in. If you sell to competing distributors on different terms, have the discount schedule reviewed against the Robinson-Patman Act. If the deal involves an appointment fee, mandatory training charges or a required starter package, get a franchise analysis before you take the money. And if the products are regulated, carry consumer-facing warranties or have a realistic injury risk, have the warranty, indemnity, insurance and recall terms reviewed together, not clause by clause, since those four allocate the same risk and are usually inconsistent in templates. This page and the template are general information, not legal advice. Adapt them to your situation and the law where you operate.

What this template assumes, and where it leans

Two things to know before you use it. First, scope: this is drafted for the sale of goods, for a United States supplier and distributor, under United States federal law and the law of a single governing state. It is a reasonable starting point for a cross-border arrangement, which is why it carries an express exclusion of the international sales convention and a mandatory-local-law clause, but it is not a substitute for local advice. Distribution of services, software licensing, alcohol, pharmaceuticals, medical devices, motor vehicles and fuel all sit under additional regimes this template does not attempt to cover. Second, balance. We write these to be usable by either side, and most of the document is even-handed, but a few clauses lean and you should know which:

• The inventory buy-back is the supplier's election, not the distributor's right. A distributor should ask for it to be mandatory.
• The supplier can terminate immediately for a confidentiality or anti-corruption breach, and can refuse the run-off period in those cases. The distributor has no matching right.
• The obligation not to carry a competing product applies even where the appointment is non-exclusive. If you are the distributor, that is worth pushing back on.
• The supplier may reject any purchase order, while the distributor still owes the minimum purchase commitment. The best-efforts-to-supply sentence and the shortfall excuses are there to balance that, and a distributor should check they survive negotiation.
• Several clauses give the supplier an election exercisable by notice alone. They are listed in the amendment clause so they are easy to find and argue about.
• The drafting notes in square brackets are guidance for whoever fills the template in. Delete every one of them, and every unused bracketed option, before the document is signed.