Strong licensing and distribution agreements align commercial goals with enforceable obligations, ensuring predictable revenue streams, protecting trademarks and trade secrets, and establishing clear termination and quality standards. They reduce the likelihood of disputes by defining roles, territories, performance metrics, and remedies for breach or noncompliance.
Detailed license controls, brand approval processes, and clear recall or warranty allocation preserve reputation and reduce the risk that third parties will misuse IP or damage consumer perception, maintaining long-term brand and business value.
Our firm combines transactional lawyering and litigation readiness to create agreements that anticipate common disputes and include enforceable protections. We work closely with business owners to align contract language with operational realities and commercial objectives.
Ongoing monitoring includes reviewing sales reports, conducting audits if necessary, and taking measured enforcement steps such as cure notices or mediation to resolve issues quickly while preserving business relationships where possible.
A license grants permission to use intellectual property under defined terms such as scope, duration, and royalties, whereas a distribution agreement appoints a party to resell products and often governs purchasing, pricing, and logistics. Licenses focus on use rights; distribution agreements focus on commercial resale and market access. Choosing between them depends on whether you intend to permit ongoing use of IP independent of sales or to sell products through third parties. Many businesses use both together, combining a license for technology or branding with distribution terms that control channels, quality, and performance expectations.
Royalties can be structured as a percentage of net sales, fixed fees, or minimum guaranteed payments, and should define calculation methods, allowable deductions, and reporting schedules. Clear definitions of gross versus net revenue, returns credits, and exchange rate handling prevent disputes over amounts owed. Enforcement relies on audit rights, periodic reporting requirements, and contractual remedies for underreporting, including interest, additional payment, and termination rights. Including audit procedures and deadlines makes disputes about royalty calculations more manageable and enforceable in practice.
To protect your brand, include approval rights for marketing materials, packaging, and product changes, along with quality control standards and inspection rights. Define prohibited uses of trademarks, colors, or trade dress and require adherence to brand guidelines to maintain consistency and reputation. Also include remedies for breaches such as cure periods, suspension of rights, and termination for persistent misuse. Indemnity clauses for consumer claims and recall procedures further protect brand owners from financial harm and reputational damage arising from distributor actions.
Exclusivity may be appropriate when a distributor commits to measurable sales targets or substantial investment in market development. If exclusivity is granted, include performance benchmarks, time limitations, and termination triggers to prevent underperformance from locking you out of other opportunities. For licensors, consider phased exclusivity tied to sales milestones or geographic scope that can be adjusted if market conditions or distributor performance change. Carve-outs for certain channels or key accounts help preserve flexibility while incentivizing distributor investment.
Territorial clauses should clearly define geographic limits and whether online sales are permitted outside those boundaries. Address cross-border ecommerce by specifying permitted channels, geoblocking requirements, and responsibilities for taxes, shipping, and customs to reduce disputes over where products can be sold. Include reporting obligations for online sales and audit rights to detect unauthorized channel activity. If online marketplaces are involved, require distributor cooperation to prevent diversion and ensure marketplace terms do not conflict with your brand policies or pricing strategies.
Common remedies include monetary damages, specific performance for unique goods or IP, injunctive relief for ongoing misuse, and termination rights for material breaches. Contracts often set out cure periods, escalation steps like mediation, and liquidated damages for clearly foreseeable harms. Including dispute resolution clauses such as mediation or arbitration can speed resolution and limit litigation costs. Carefully drafted notice and cure procedures reduce surprises and provide structured opportunities to resolve problems before termination or costly enforcement is necessary.
Yes, agreements should allocate responsibility for product defects, recalls, and regulatory compliance. Specify which party handles recalls, funding, communication with authorities, and indemnification obligations to ensure swift action and appropriate cost sharing if consumer safety issues arise. Insurance requirements should be explicit, including minimum coverage levels and proof of insurance, so affected parties have financial backing to address claims. Clear recall procedures and communication plans protect consumers and help contain reputational damage for all parties involved.
Termination for poor performance should be tied to objective metrics and a defined notice and cure process. Include minimum sales targets, reporting obligations, and documented failure to meet benchmarks that trigger written notice and a reasonable cure period before termination becomes effective. Contract language should also address transition obligations such as inventory wind-down, customer communications, and protection of confidential information to ensure an orderly exit that preserves business continuity and limits goodwill loss.
Protect confidential information with clear definitions of what constitutes confidential materials, permitted uses, handling obligations, and duration of confidentiality. Include exceptions for publicly available information and required disclosures under law, along with return or destruction obligations upon termination. Consider supplementary protections like restricted access, encryption, and designated personnel lists. Remedies for breach should include injunctive relief and indemnities to deter improper disclosure and provide recourse if trade secrets or sensitive business information are misused.
If a foreign distributor engages in unlawful conduct or violates export rules, include notice requirements, audit rights, and termination triggers tied to illegal activity. Work with counsel to coordinate local enforcement, notify relevant authorities if required, and implement immediate measures to suspend shipment or revoke distribution rights. Preventive clauses such as compliance certifications, training obligations, and periodic audits reduce the risk of regulatory violations. Contractual remedies should permit rapid termination and recovery of goods or IP if local laws are breached to shield your business from legal and financial exposure.
