What is Distributorship Law?
Distributorship Law is the law pertaining to the supply chains for certain types of sales arrangements. Distributors and dealers are participants in what is sometimes called a “supply channel.” The distributor is typically a wholesaler who sells merchandise to dealers. Dealers, in turn, are typically retailers who sell directly to the public.
This traditional terminology is most easily translatable to the automotive industry and the distribution of machinery and mechanical goods. This basic structure has many variants, but the overall scheme is conceptually the same. One company provides the product to a distributor who then re-sells the product to dealers who then sell the items to the end purchaser. There can be multiple levels of distributors and dealers, and in some instances dealers may even sell to the distributors of another retail chain.
The laws affecting these business relationships cross over into many practice areas. For example, there are usually a number of contracts securing these relationships, there are shipping and tax implications, there are consumer protection laws, and a variety of intellectual property and licensing issues.
For more information on distributorship laws and this form of commerce, please review the materials found below. Additionally, should you require the assistance of a business attorney with experience in distributorships or a litigator who can help you resolve a dispute over these matters, you can find one on the Law Firms page.
Distributorship Law - US
- ABA - Unilateral Conduct Committee
The Unilateral Conduct Committee's goal is to be a comprehensive source of information on the application of competition law to dominant firms, and to offer diverse perspectives and foster informed debate over the laws and policies governing unilateral anticompetitive conduct worldwide. In addition, the Committee assists the Section of Antitrust Law and the larger ABA in responding to requests for commentary on competition policy in general.
- Beer Distribution - Three-Tier System
The Three-tier System provides checks and balances in the way that alcohol is distributed and sold to retailers and consumers. The system consists of three levels: • Manufacturer • Distributor • Retailer
- Distribution Law Developments at the Federal Trade Commission
The Commission has recently taken two enforcement actions with a potentially significant effect on distribution law. The first is a series of consent agreements involving cooperative advertising in the pre-recorded music industry; the second is a consent order resolving Robinson-Patman Act charges against McCormick & Co., the leading supplier of spices. I would like to give you some background on these two cases, along with some personal views that are not necessarily shared by anyone else on the Commission.(1) I would also like to mention in closing a rather controversial issue that the Commission is trying to learn more about: so-called slotting allowances paid by manufacturers to retailers.
- Distributor / Merchant - Legal Definition
One whose business it is to buy and sell merchandise; this applies to all persons who habitually trade in merchandise. In another sense, it signifies a person who owns ships, and trades, by means of them, with foreign nations, or with the different States of the United States; these are known by the name of shipping merchants. According to an old authority, there are four species of merchants, namely, merchant adventurers, merchant dormant, merchant travelers, and merchant residents.
- Guide to the FTC Franchise Rule - Distributorship
The Rule exempts or excludes some relationships that would otherwise meet the coverage prerequisites (Parts 436.2(a)(3) and (4)): * Minimum Investment: This exemption applies if all payments to the franchisor or an affiliate until six months after the franchise commences operation are $500 or less (Part 436.2(a)(iii)). * Fractional Franchises: Relationships adding a new good or service to an established distributor's existing goods or services, are exempt if: (a) the franchisee or any of its current directors or executive officers has been in the same type of business for at least two years, and (b) both parties anticipated, or should have, that sales from the franchise would represent no more than 20% of the franchisees sales in dollar volume (Parts 436.2(a)(3)(i) and 436.2(h)).
- ICC Model Distributorship Contract
Distributorship contracts are one of the most frequently used means for organizing the distribution of goods in a foreign country. But like commercial agency agreements, distributorship agreements suffer from the absence of a set of uniform rules governing the rights of the parts.
- Robinson–Patman Act / Anti-Price Discrimination Act
The Robinson–Patman Act of 1936 (or Anti-Price Discrimination Act, Pub. L. No. 74-692, 49 Stat. 1526 (codified at 15 U.S.C. § 13)) is a United States federal law that prohibits anticompetitive practices by producers, specifically price discrimination. It grew out of practices in which chain stores were allowed to purchase goods at lower prices than other retailers.
- State Self Distribution Laws
While this database has undergone several rounds of fine-tuning, it should not be considered the final word on self distribution laws across the country, but rather as a signpost pointing you in the right direction.
Organizations Related to Distributorship Law
- American Machine Tool Distributors' Association (AMTDA)
Founded in 1925, the American Machine Tool Distributors' Association (AMTDA) is a trade association dedicated to advancing the sales and marketing of machine tools in the United States through the distribution channel. The 250 machine tool Distributor member companies and 150 Builder and Marketing Associate members represent the latest in manufacturing technology and machine tools in the North American marketplace.
- Compliance Service of America - Three Tier or Free Trade?
Try to imagine a world in which there is no three tier system of alcoholic beverage distribution. Although in the past such speculation would be purely fanciful, now, for many reasons, it has become a timely and appropriate consideration. Because that is so, we dedicate this column to thinking realistically and open-mindedly about the past, present, and future of the three tier system.
- Federal Trade Commission
The FTC deals with issues that touch the economic life of every American. It is the only federal agency with both consumer protection and competition jurisdiction in broad sectors of the economy. The FTC pursues vigorous and effective law enforcement; advances consumers’ interests by sharing its expertise with federal and state legislatures and U.S. and international government agencies; develops policy and research tools through hearings, workshops, and conferences; and creates practical and plain-language educational programs for consumers and businesses in a global marketplace with constantly changing technologies.
- Fluid Power Distributors Association
FPDA is the professional network for fluid power, automation and motion technology providers dedicated to significantly enhancing member and channel performance by delivering indispensable networking, education and success strategies.
- Food Service Distributors - Center for Distribution Excellence
IFDA's Center for Distribution Excellence (CDE) is an online resource designed specifically for IFDA members. Our goal is to promote awareness of best practices and alternatives that will help foodservice distributors grow and prosper even in today's challenging climate.
- Heavy Duty Distribution Association (HDDA)
The $295 billion motor vehicle aftermarket industry’s only vertically integrated trade association. With more than 23,000 members and affiliates, AAIA is the only aftermarket trade association in the United States that represents the shared interests of manufacturers, distributors, jobbers, retailers, service and repair shops, program groups, manufacturers’ reps, educators, publishers, business affiliates, and state associations.
- Independent Cosmetic Manufacturers and Distributors Association
Join cosmetic company owners and executives worldwide in the cosmetic and personal care industry. Participate in open board meetings, seminars, trade shows and networking events. Interact through the ICMAD Web bulletin board.
- Material Handling Equipment Distributors Association
The Material Handling Equipment Distributors Association is the only national trade association dedicated solely to improving the proficiency of the material handling equipment distributor. MHEDA represents all segments of the industry and offers resources such as education, networking opportunities, industry specific information, statistical and trend analysis and all other information specific to the material handling industry.
- National Association of Chemical Distributors (NACD)
The National Association of Chemical Distributors (NACD), established in 1971, is an international association of chemical distributors and their supply-chain partners. Member companies process, formulate, blend, re-package, warehouse, transport, and market these chemical products for over 750,000 customers.
- National Association of Tobacco Outlets
The National Association of Tobacco Outlets (NATO) is an association organized to enhance the common business interests of tobacco outlets, to support the legislative interests of association members and to encourage the expansion of the tobacco outlet marketplace segment of the tobacco industry in a responsible and law abiding manner.
- National Beer Wholesalers Association
NBWA works to strengthen the state-based system of alcohol regulation that facilitates a balanced and orderly marketplace, drives state and local control, collects tax revenue, promotes temperance and effectively discourages overly-aggressive marketing and sales practices.
- National Electronic Distributors Association
NEDA was founded in 1939 as a non-for-profit trade association. It represents nearly 500 companies (95% of distribution and sales) including distributors and manufacturers which deals in electronic components, wire & cable products, computer and data communication products, test, measurement & control instruments.
- National Fastener Distributors Association (NFDA)
Welcome to the National Fastener Distributors Association (NFDA) website, your source for industry and member news, training, education, information, benefits and advocacy. Established in 1968, NFDA has been a leader in the fastener industry for 35 years providing a strong voice for programs that benefit its members and the industry as a whole. As
- United States Department of Commerce
The U.S. Department of Commerce has a broad mandate to advance economic growth and jobs and opportunities for the American people. It has cross cutting responsibilities in the areas of trade, technology, entrepreneurship, economic development, environmental stewardship and statistical research and analysis. The products and services the department provides touch the lives of Americans and American companies in many ways, including weather forecasts, the decennial census, and patent and trademark protection for inventors and businesses.
Publications Related to Distributorship Law
- Independent Distributor Agreement
The Independent Distributor ("ID") Application, ID Agreement, and the ID Marketing Plan (collectively the "Agreement") explain and govern the relationship between each ID and MyNet Universe, Inc. (the "COMPANY"). Each ID is required to read, understand, and comply with all terms and conditions of the Agreement. The Agreement shall constitute the entire understanding of the parties with respect to the subject matters covered in it.
- International Journal of Franchising and Distribution Law
The growing nature of franchising as an international commercial industry means a constant flow of information and legislation from many jurisdictions. Keeping up with the changes and developments while critical to competent participation in the field proves a time-consuming challenge. The International Journal of Franchising and Distribution Law is the only journal that provides for the international needs of the franchising practitioner. In a single reference source with a highly practical angle this unique quarterly publication assembles the key often difficult to obtain materials that the international franchising practitioner needs.
Articles on HG.org Related to Distributorship Law
- Economic Damages of an Employee Reselling Company ProductsMany employees are able to purchase products at their places of employment and then resell them at a higher price or without the discount they are often awarded while working for the company.
- Breach of Duty by an Agency and ResolutionAgencies often owe a duty of care to clients or customers, and there is usually some form of contract drafted and signed between businesses in this manner. The duty may be to ensure no danger occurs while within or on the property of the entity, it may be duty of care to prevent injury or another duty similar in scope.
- Of Mice and Men and Fiduciary DutiesA short survey of Delaware and Georgia law regarding standards of care for judging decisions of members or managers when fiduciary duties have been eliminated
- The Basics of American FranchisingPerhaps you have seen an advertisement at a restaurant suggesting that you can open your own franchise and make a lot of money. Or, have you seen an advertisement on TV or the Internet talking about franchising opportunities? Or has someone approached you about buying into a multilevel marketing franchise? Whatever the situation, an understanding of what franchising is and its legal ramifications can be important for a successful business.
- All Business and Industry Law Articles
Articles written by attorneys and experts worldwide discussing legal aspects related to Business and Industry including: agency and distributorship, agency law, business and industry, business formation, business law, commercial law, contracts, corporate governance, corporate law, e-commerce, food and beverages law, franchising, industrial and manufacturing, joint ventures, legal economics, marketing law, mergers and acquisitions, offshore services, privatization law, retail, shareholders rights and utilities.