As a business owner or a manufacturer looking to expand your product’s reach, partnering with a distributor can be a great way to distribute your product to a wider audience. However, before jumping into a distributor contract, it’s important to understand the terms and conditions laid out in the agreement.
One key document in a distributor agreement is the OGS, or Open General Supply Agreement. This document lays out the general terms of the relationship between the manufacturer and the distributor.
The OGS typically includes information on the quantity and quality of the product being distributed, the price at which it will be sold, the territories in which it will be sold, and the length of the agreement. It also addresses issues like payment terms, warranties, and the rights and obligations of the parties involved.
It’s important to pay close attention to the terms of the OGS, as they can greatly impact the success of your business relationship with the distributor. For example, the OGS may stipulate the exclusive rights of the distributor to sell and distribute your product in a certain region, limiting your ability to work with other distributors or sell directly to consumers in that area.
Additionally, the OGS may include specific requirements for packaging, labeling, and shipping, which can impact the cost and logistics of production. Be sure to carefully review and negotiate these terms before signing the agreement.
Another important consideration when entering into a distributor contract is the termination clause. The OGS should outline the conditions under which either party can terminate the agreement, such as breach of contract, bankruptcy, or failure to meet sales targets. This clause is critical, as it can affect the financial implications of the agreement and the ability of either party to exit the relationship.
Overall, when entering into a distributor contract with an OGS, it’s important to have a clear understanding of the terms and conditions involved. Take the time to review and negotiate the agreement to ensure that it benefits both parties and sets the foundation for a successful partnership.
