Well-constructed agreements protect intellectual property, set clear commercial terms, and reduce litigation risk by describing pricing, payment schedules, performance metrics, and termination triggers. They enable partners to scale responsibly while preserving the licensor’s control over brand integrity and ensuring distributors meet minimum standards for sales, storage, and customer service.
Comprehensive clauses addressing permitted use, branding guidelines, and enforcement rights help maintain a consistent market presence and prevent damage to reputation. These protections support long-term brand equity and ensure licensees and distributors align with the licensor’s commercial standards.
Clients benefit from a practical, business-focused approach to contract drafting and negotiation that balances legal protection with commercial flexibility. We prioritize clear language, enforceable remedies, and alignment between contractual terms and operational practices to reduce the likelihood of disputes.
When disputes arise, we evaluate contractual remedies, pursue negotiation or mediation where appropriate, and prepare for litigation or arbitration if needed. The goal is to resolve conflicts in a way that preserves business value and mitigates future risk.
A license grants a party specific rights to use intellectual property, such as patents, trademarks, or software, typically subject to limitations on scope, duration, and permitted uses. Licenses can be exclusive or nonexclusive and often include payment structures like royalties, fixed fees, or milestone payments. A distribution agreement governs how a supplier’s products are sold through intermediaries, addressing inventory, delivery, pricing, marketing responsibilities, and customer support. Distribution contracts allocate operational duties, sales targets, and quality controls rather than granting ownership over underlying intellectual property rights.
Protecting a brand begins with clear quality control provisions requiring distributors to meet labeling, packaging, and service standards. Granting approval rights for marketing materials and product modifications helps ensure consistent presentation and prevents deterioration of brand reputation. Additionally, include audit and inspection rights, prompt notice and cure provisions for breaches, and termination triggers for misuse of trademarks. Contractual indemnities and limitations on sublicensing reduce the risk of unauthorized brand exploitation and provide remedies if standards are not met.
A royalty clause should specify the royalty base, calculation method, payment frequency, and reporting requirements. Clarify whether royalties are based on wholesale, net revenue, or units sold, and include procedures for invoicing, late payments, and currency considerations for cross-border transactions. Include audit and recordkeeping rights so the licensor can verify reports and calculations. Consider minimum guaranteed payments or advance royalties to ensure baseline revenue, and define adjustments for returns, discounts, or taxes to prevent disputes over amounts owed.
Yes, you can restrict sales through territorial or channel exclusivity clauses that limit where and how a distributor may sell products. These clauses should clearly define geographic boundaries, permitted sales channels, and the consequences for violating territorial or channel restrictions. When imposing restrictions, consider performance conditions to maintain exclusivity and ensure compliance with competition laws. Include mechanisms to address grey-market sales and remedies such as injunctive relief, termination rights, or liquidated damages to manage breaches effectively.
Termination clauses usually define events of default, notice requirements, and cure periods that allow a breaching party to remedy specified issues. Common termination triggers include failure to pay, insolvency, material breach, or repeated failure to meet performance standards like minimum purchase obligations. Contracts should also address wind-down procedures such as inventory disposition, unsold stock buybacks, and customer transition responsibilities. Defining post-termination rights for intellectual property and residual obligations prevents confusion and reduces post-termination disputes.
Licensors should include audit rights allowing inspection of sales records, books, and relevant documents to verify royalty calculations and compliance. Specify the scope, frequency, notice requirements, and acceptable auditors, and require cooperation during audits to ensure transparency and accountability. Limit audits to a reasonable time frame and provide confidentiality protections for sensitive business information. Also include remedies if audits reveal underreporting, such as payment of unpaid royalties, interest, and reimbursement of audit costs when underreporting exceeds specified thresholds.
Disputes under licensing and distribution agreements are often handled through negotiation, mediation, or arbitration, depending on the dispute resolution clause. These alternative dispute resolution methods can be faster and less costly than litigation and are useful to preserve business relationships while resolving contractual differences. Include clear governing law and forum selection clauses to reduce uncertainty, and specify procedures for interim relief where necessary. For cross-border agreements, address choice of law, enforceability of awards, and local legal requirements to ensure practical enforceability of outcomes.
International agreements require provisions addressing customs, tariffs, export controls, tax implications, and currency risk. Clarify which party handles import/export compliance, shipping terms, duties, and insurance to avoid surprises and regulatory penalties when crossing borders. Also address local regulatory approvals, product labeling requirements, and data transfer rules where applicable. Tailor dispute resolution and governing law to consider enforceability in both jurisdictions, and include force majeure language that contemplates international disruptions.
To reduce reseller insolvency risk, require credit checks, set credit limits, and include payment security mechanisms such as letters of credit or parent company guarantees. Establish clear payment terms, advance payments, or staged deliveries tied to performance to limit exposure to nonpayment. Include inventory control and buyback provisions for unsold goods, and maintain audit rights to monitor financial health. Early termination and suspension rights for missed payments or deteriorating financial conditions help protect suppliers from escalating losses.
Revisit or amend agreements when business models, product lines, or market conditions change, such as entering new territories, launching new product versions, or adjusting pricing structures. Periodic reviews ensure contracts remain aligned with current commercial practices and regulatory environments. Consider amendments to address performance shortfalls, shifts in distribution channels, or changes in intellectual property ownership. Well-documented amendments with clear signatures and effective dates help prevent misunderstandings and preserve continuity as business needs evolve.
