Silk Fan Distributor and Territory Exclusivity FAQ

Data: The U.S. International Trade Administration publishes market and export resources that describe distribution channels and market entry structures for exporters.

Judgment: Write the channel and the online rule into the grant, because a territory defined only by geography cannot prevent a distributor from selling everywhere on a marketplace.

Source: U.S. ITA — International Trade Administration Export Resources (2024)

Data: ISO standards on market and distribution activity describe the level at which goods are made available to a market, which is the reference for defining exclusive and non-exclusive channels.

Judgment: Tier the exclusivity rather than granting it whole, because a graded structure lets a partner earn a wider grant and gives the supplier a route to adjust an underperforming territory.

Source: ISO — Standards Catalogue: Market and Distribution (2024)

Data: The U.S. FTC rules library collects the trade regulation rules and guides that govern business conduct, including practices relating to pricing and distribution.

Judgment: Set your own wholesale and recommended prices and agree a channel policy rather than dictating a resale price, because the lawful reach of a supplier over a reseller's price varies by market.

Source: U.S. FTC — FTC Rules and Guides Library (2024)

Should a silk fan supplier give territory exclusivity?

Only against a measurable commitment. Exclusivity is a valuable asset, so it should be traded for a purchase volume, a marketing plan, or a service level that can be verified, and it should be reviewed at defined intervals. Grant exclusivity with no performance condition and the supplier loses the ability to sell into a territory even if the distributor does nothing. Tie it to a target and a review date.

What should a silk fan distribution agreement include?

The territory and channel definition, the exclusivity conditions and review date, the pricing level and currency, the minimum purchase or forecast, payment terms, brand and trademark usage, the marketing obligations, the term and termination triggers, and the rules for online and cross-border sales. Each item should be measurable, because an agreement that cannot be checked cannot be enforced.

Does a distributor get to set retail prices for silk fans?

Not unilaterally, and in many markets a supplier cannot dictate a competitor's resale price, though it can set its own wholesale price and a recommended retail price. The practical route is to agree a policy on minimum advertised pricing and channel rules with the distributor and apply it consistently, rather than imposing a resale price that may not be lawful in the market.

How should exclusivity be traded for performance?

By level: no exclusivity for a new or unproven partner, channel exclusivity traded for a marketing plan, territory exclusivity traded for a volume target, and full exclusivity traded for volume plus a service obligation. Review channel and territory grants annually and strategic grants more often. The review date is the mechanism that lets a territory be adjusted without ending the relationship.

What performance should the agreement measure?

Purchase volume for sell-in, sell-through for real demand, marketing activity for brand building, market coverage for the number of accounts reached, and service quality for returns and claims. Ask for sell-through rather than only sell-in, because a distributor can load a warehouse and still fail the market. Review quarterly for volume and sell-through, and annually for coverage and service.

Who acts as importer of record under a distribution agreement?

It depends on the terms, and it should be named in the agreement. The party that imports the goods carries the customs compliance burden as importer of record, so confirm the allocation before signing rather than discovering it at the first entry. Pair the assignment with the territory definition, because the importer of record and the granted territory should belong to the same party wherever possible.