What is a Dealership Agreement

A dealership agreement is the legal bond created and substantiated between two companies wherein one of the companies is the distributor and the other is the dealer. The term dealership refers to the company which is granted the rights to sell the products of the distributor or retailing company and dealership agreement is mutually decided upon by them.

The rights pertaining to the sale and promotion of the products are usually included in the dealership agreement and the party is formally turned into authorized dealer to be able to conduct sale processes. The distributor company has its marked boundaries within which it operates and does not allow all dealers to franchise its products. Therefore the selection of dealers is in itself a legal and official procedure.

The main issues of dealership agreement have been laid down in the following along with the uses the resolution of such issues mainly serve in this context:

  • The dealer here functions as a franchisee and distributes the products with due consent of the distributor company as the operations are performed within an entirely legal framework. This preserves the right of both the parties equally.
  • It is clearly indicated in the agreement document about the categories in which rights are specifically granted and the extent to which each right is legally validated for parties to be certain about their territory of authorization.
  • The agreement specifications are mutually agreed upon in terms of agreement tenure, product pricing, profit proportions and payment processes that are inevitable for any agreement. In case of non conformity to the agreement tenets, the parties can seek legal intervention and sue each other subsequently.
  • The agreement usually defines the responsibilities and liabilities of the dealer so that in case of any dispute or fault, parties can take appropriate actions and settle the dispute legally.

Category: Sample Agreements

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