Well-drafted agreements minimize ambiguity around pricing, territories, and permitted uses, reducing litigation risk and protecting revenue. They help companies control brand presentation and quality through standards and audit rights, enable scalable growth by clarifying sublicensing and assignment rules, and provide mechanisms for resolving disputes efficiently to preserve commercial relationships and business continuity.
Detailed quality control provisions, approval processes for marketing materials, and limits on sublicensing protect the value of trademarks and other intellectual property. These provisions reduce unauthorized uses and reputation risks, preserving consumer trust and ensuring that distribution partners promote the brand consistently and within agreed standards.
Our practice focuses on practical commercial outcomes and careful legal drafting that aligns with your business model. We prioritize clear contract language that reduces ambiguity, limits exposure, and supports enforceable remedies, while considering regulatory and tax implications relevant to distribution and licensing arrangements.
We draft amendments to reflect business evolution, advise on renewals or transitions, and pursue dispute resolution strategies that preserve commercial value. Options include negotiated settlements, mediation, or litigation planning, each selected to match the client’s goals and the dispute’s commercial context.
A license grants permission to use intellectual property or proprietary assets under defined terms, while a distribution agreement governs how products are sold and who may sell them. Licensing often focuses on rights to use technology or branding, and distribution agreements focus on sales channels, responsibilities, and logistics related to product movement. Many arrangements combine both elements where a licensor allows use of IP and a distributor agrees to market and sell products. Clarity about scope, exclusivity, territorial limits, and payment terms is essential to prevent overlap or conflict between the two contract types and to protect commercial interests over time.
Exclusivity clauses grant a partner sole rights within a territory or channel and can incentivize investment by the distributor, but exclusivity may increase negotiation leverage and require performance thresholds. Consider whether exclusive rights align with growth plans and demand, and include measurable performance obligations to avoid long-term underperformance. Alternatives to full exclusivity include time-bound exclusivity, limited category exclusivity, or preferred partner arrangements tied to sales targets. These approaches encourage partner commitment while allowing the licensor flexibility to protect overall market strategy if performance expectations are not met.
Royalties and payments can be structured as percentage-of-sales, fixed fees, milestone payments, or hybrid approaches. Key considerations include defining the royalty base, allowable deductions, reporting frequency, and late payment remedies. Clear definitions prevent misunderstandings and enable accurate accounting and forecasting. Include audit rights, minimum guarantees where appropriate, and dispute resolution for royalty calculations. Consider aligning royalty periods and reporting to operational cycles and build in mechanisms to adjust rates for inflation, volume discounts, or significant business changes to keep terms practical over time.
Quality control provisions maintain brand consistency by requiring approval of marketing materials, specifying manufacturing standards, and allowing periodic inspections or reporting. These terms protect the licensor’s reputation and help ensure consumers receive a consistent product or service, reducing the risk of brand damage from substandard distribution practices. Draft measurable standards and objective approval processes to avoid subjective disputes. Include cure periods and remediation steps for noncompliance, and tie quality expectations to termination or penalty clauses to incentivize partner compliance without disrupting ongoing commercial activity.
Protect intellectual property by defining the license scope narrowly, reserving ownership rights, and restricting sublicensing or unauthorized use. Include confidentiality obligations, requirements for proper trademark use, and mechanisms for addressing infringement by third parties. Clear ownership and maintenance responsibilities prevent erosion of IP value over time. Require reporting of misuse and allocate responsibilities for infringement enforcement and costs. Consider including indemnities for third-party claims and insurance requirements to mitigate financial exposure related to IP enforcement or defense, while tailoring provisions to the asset’s commercial significance.
Inventory treatment on termination should be addressed up front, specifying whether distributors may sell off remaining stock, return unsold items, or destroy branded materials. Include timelines, accounting for final payments, and responsibilities for unsold or defective products to reduce disputes and clarify post-termination obligations. Plan for customer transitions by addressing ongoing service obligations, warranties, and support commitments tied to sold products. Clear procedures facilitate orderly wind-downs and minimize disruption to customers, preserving goodwill and limiting exposure to warranty or recall liabilities after the relationship ends.
Cross-border agreements require attention to export controls, customs, taxes, import regulations, and differing intellectual property enforcement practices. Language regarding applicable law, dispute resolution, and compliance with local regulations is important, as is allocation of duties for customs clearance, duties, tariffs, and logistics responsibilities. Consider local regulatory approvals, data transfer restrictions, and the need for localized contract provisions to reflect cultural and legal differences. Use clauses that designate governing law and dispute resolution mechanisms practical for international enforcement and include contingency plans for changing regulatory landscapes.
Assignment and transfer clauses determine whether and how rights may be transferred to successors, affiliates, or third parties. Licensors often restrict assignment to protect control over who uses the IP or represents the brand, while allowing transfers to affiliates or in corporate sales with consent or notice provisions. Draft assignment rules that balance transaction flexibility with the licensor’s need for oversight. Include consent requirements for transfers that materially affect the contract’s commercial or reputational aspects and streamlined notice procedures for less material assignments to avoid unnecessary negotiation delays.
Audit rights allow licensors to inspect sales records and verify royalty calculations, with agreed notice periods, frequency limits, and confidentiality protections for financial information. Effective audit clauses establish who may conduct audits, the scope of review, acceptable sampling methods, and consequences for underreporting, including repayment, interest, and audit cost recovery. Limit audits to reasonable intervals and define procedures to minimize operational disruption. Include safeguards for sensitive commercial data, requirements for cooperative access, and dispute resolution steps if audit findings are contested to maintain trust while ensuring transparency.
Dispute resolution clauses commonly include negotiation followed by mediation or arbitration, and where appropriate, venue selection for litigation. Choose mechanisms that balance speed, confidentiality, cost control, and enforceability; arbitration can provide finality and confidentiality while court litigation may be preferable where injunctive relief is likely. Draft provisions that identify governing law, preferred forums, and sequences for escalation. Include interim relief language for urgent disputes affecting IP or financial exposure, and consider practical enforcement concerns when selecting dispute resolution to ensure remedies are meaningful across relevant jurisdictions.
