Where you wish to sell direct to customers, rather than using a reseller or a distributor, a good way to achieve this is to appoint agents. This can assist with your activities in the market you are currently active in or can offer an opportunity to quickly expand the geographic scope of your business whether to other areas of the UK or through exporting.
Agents have significant advantages over a distributor/reseller model. Since you will be the person contracting with the customer, you are able to control the “deal” which the agent agrees on your behalf. Most importantly, you retain full control over the prices which customers pay for your products (under a reseller/distributor model competition law prevents you from controlling resale prices).
You will need to decide, and include in your agency agreement, what you agent will do on your behalf, for example:
- Will the agent enter into contracts on your behalf (often called sales agency) or simply develop leads and pass to you for agreeing terms (often called marketing agency)?
- Will the agent only act for you or will they act for other principals?
- What specific acts will the agent be required to do to promote your products (attend trade fairs, make customer visits etc.)?
- Will the agent carry out credit checks and provide after sales service?
Whilst agency can provide a greater degree of control over how your products are sold, you need to be careful that the agent is appointed in such a way that it is considered to be a “genuine agent” under competition law. If the agent is not a genuine agent then restrictions on pricing will potentially constitute a very serious breach of competition law. Our experienced lawyers can assist you in ensuring that you avoid this risk.