Well-crafted licensing and distribution agreements preserve brand integrity, ensure predictable revenue streams, and limit exposure to breach and intellectual property misuse. They provide operating rules for partners, set enforcement options, and support business growth by clarifying exclusivity, territory, pricing, and performance metrics while helping companies comply with regulatory and tax considerations.
Comprehensive contracts identify and allocate potential liability, set insurance and indemnity obligations, and include recall or defect procedures. This reduces the likelihood of costly litigation and clarifies remedies, making it easier to manage risk when disputes or performance issues occur.
Hatcher Legal combines business transaction experience with a pragmatic approach to contract drafting, emphasizing clarity, enforceability, and commercial outcomes. We help clients negotiate favorable economic terms while protecting reputation and operational flexibility across licensing and distribution relationships.
When business needs change, we draft amendments or negotiate exits, and provide dispute resolution support to protect client interests while seeking commercially sensible resolutions that preserve business continuity where possible.
A license grants permission to use intellectual property under defined conditions while ownership remains with the licensor. A distribution agreement governs the sale and delivery of products from a supplier to a distributor or reseller. Both can overlap when licensed IP is packaged with physical goods, so clarity avoids conflicting rights.
Territory and exclusivity should reflect realistic market reach and the partner’s capacity to develop sales. Consider current market presence, regulatory boundaries, and the business’s ability to support exclusive rights. Draft terms that include performance milestones or minimum sales to maintain exclusivity and avoid locking in underperforming partners.
Key financial terms include royalty rates, minimum guarantees, payment schedules, and currency and tax responsibilities. Include clear invoicing procedures, interest on late payments, and audit rights to verify reported sales. Well-defined financial terms reduce disputes and ensure consistent cash flow for licensors and suppliers.
Protect brand and quality by defining product specifications, acceptable materials, packaging requirements, and approval processes for marketing materials. Include inspection, testing, and corrective action procedures to address defects and ensure consistent consumer experience. Clear obligations reduce reputational risk and support enforcement when standards slip.
Remedies for breach typically include notice and cure periods, termination rights, and monetary damages. Agreements often provide for injunctive relief for IP misuse and dispute resolution mechanisms. Prompt documentation and escalation per the contract improve chances of a favorable outcome while preserving business relationships where appropriate.
International deals should address import/export controls, customs duties, arbitration forum, choice of law, and currency arrangements. Include compliance with local regulations, data transfer rules, and tax implications. Precise warranty and indemnity language helps manage cross-border liabilities and enforcement challenges in foreign jurisdictions.
Limit sublicensing and assignment through specific clause language that requires consent or conditions for transfer. When allowing assignment, include financial thresholds, performance assurances, and IP reversion rights to prevent unintended transfers that undermine revenue or control. Clear assignment rules protect long-term strategic interests.
Audit rights and reporting requirements are essential for ensuring accurate royalty calculations and verifying compliance. Define audit frequency, scope, and procedures, and include remedies for underreporting. Regular reporting obligations provide transparency and help identify performance issues early, supporting timely corrective action.
Termination provisions should cover termination for cause, convenience, insolvency, and change of control, and set notice and cure periods. Address post-termination obligations such as inventory buybacks, IP reversion, and ongoing confidentiality. Clear exit plans reduce disruption and clarify financial and operational responsibilities after termination.
The timeline varies with deal complexity, from a few weeks for simple template-based arrangements to several months for high-value or cross-border transactions. Factors include the number of stakeholders, regulatory reviews, and negotiation intensity. Early preparation and clear commercial priorities help accelerate the process.
