Distributor Agreement Vs. Dealer Agreement

Distributor agreements and dealer agreements are similar documents used with businesses when designating the distributorship or sale rights of products to companies. A distributor sells mainly to companies reselling goods; a dealer sells to the public.

A distributor is a type of company that purchases the rights to sell a product manufactured by a company, but does not have the rights to use that company’s name. This means that the distributor cannot rename their business using the company’s name or the products they sell. A distributor is like a middleman between a manufacturing company and a dealer. A distributor sells to several or many dealers depending on contract.

A dealer is a business that sells products to consumers. A dealer purchases goods from a distributor, not from the manufacturer and is often called an “authorized dealer.” Many companies do not want their products sold everywhere, so they only allow certain businesses to become dealers of their products.

Distributor agreements are made between a manufacturing company and a distributing company. The agreement states territorial issues and all terms of sales including payment terms. This agreement also states how the distributor promotes the sale of these products as well as the distributor’s role in advertising. Manufacturing companies also give quotas to the distributor and outline any other pertinent information agreed upon.

A dealer agreement is made between a distributor and the dealer company. It outlines all terms of sales of the products. It states the dealer’s responsibilities and rules of selling the goods.