A well-drafted licensing or distribution agreement reduces business risk by defining payment terms, territories, performance standards, termination rights, and remedies. Proper agreements preserve brand integrity, support market expansion, and create enforceable frameworks for royalties, minimum purchases, or exclusivity. Strong contracts save time and money by preventing disputes and supporting predictable planning.
Detailed payment provisions, audit rights, and minimum purchase obligations protect revenue streams and help prevent underreporting. Clear remedies for breaches enable more effective enforcement and reduce the likelihood of prolonged financial disputes that can harm cash flow and relationships with suppliers or customers.
We combine business-focused drafting with careful risk assessment to create agreements that align with your commercial strategy. Our approach emphasizes clarity, enforceability, and practical remedies to reduce disruption and support sustained revenue from licensing or distribution relationships.
If issues arise, we pursue negotiated resolutions, mediation, or litigation where necessary, always aiming to preserve business relationships. We also draft amendments to adapt agreements to new markets, product lines, or shifting commercial circumstances.
A license grants rights to use intellectual property, technology, or trademarks under defined conditions, while a distribution agreement governs the sale and delivery of tangible products through third parties. Licenses focus on permitted uses and IP protection, whereas distribution contracts address logistics, inventory, and sales responsibilities. Choosing the appropriate structure depends on whether you want to retain control over manufacturing and sales or delegate market access to third parties. Each arrangement requires tailored provisions for pricing, reporting, quality control, and termination to align with commercial objectives and protect the licensor’s interests.
Protect your brand by including quality control, branding guidelines, and approval rights in the contract. These provisions should specify acceptable materials, marketing copy, packaging standards, and inspection rights to ensure the distributor upholds your reputation and product integrity. Also require regular reporting and audit rights to monitor compliance. Clear remedies for breaches and a path to terminate for material violations reinforce adherence while allowing for corrective action before relationships are ended.
Licensing payment structures commonly include upfront fees, running royalties based on net sales, or flat periodic payments. Hybrid approaches combine minimum guarantees with royalty rates to provide predictable income while preserving upside if sales grow. Contracts should specify calculation methods, timing of payments, and late-payment remedies. Including audit rights and clear accounting definitions reduces disputes over sales figures and royalty obligations.
Early termination depends on contract terms. Agreements often allow termination for material breach, insolvency, or failure to meet minimum performance requirements. Notice and cure periods give parties time to correct issues before termination executes. Draft termination clauses to address post-termination rights, such as remaining inventory disposition, royalty payments, and return of confidential materials. These provisions help protect both parties during transition and limit exposure to unexpected losses.
Include compliance clauses requiring adherence to applicable federal and state laws, import/export rules, and labeling standards. Specify which party is responsible for taxes, duties, and regulatory filings to prevent surprises when operating across borders. Also include representations and warranties about legal compliance and a covenant to notify the other party of regulatory changes or enforcement actions. This allocation of responsibilities reduces the risk of regulatory penalties or supply chain disruptions.
Territorial rights are allocated by defining the geographic regions in which a licensee or distributor may operate. Options include exclusive, non-exclusive, or sole territory grants, each with different commercial implications for market coverage and competition. When granting exclusivity, include performance milestones or minimum sales thresholds to ensure the territory is actively developed. Non-exclusivity preserves the licensor’s ability to appoint additional partners while maintaining market flexibility.
Minimum purchase obligations protect revenue forecasts and incentivize active sales efforts by distributors. These provisions should be reasonable, tied to market potential, and include consequences for nonperformance, such as reduced rights or termination. When setting minimums, account for seasonal demand and supply constraints. Include mechanisms for renegotiation or relief in exceptional circumstances to avoid unnecessary disputes and preserve long-term relationships.
Warranty provisions should balance product assurances with liability limits. Include clear descriptions of product warranties, duration, and procedures for claims or returns. Limitation of liability and indemnification clauses manage exposure for defects or third-party claims. Ensure consumer protection laws and applicable statutory warranties are addressed. Tailor liability caps and carve-outs for willful misconduct or IP infringement to align risk with potential financial exposure.
Sublicensing and resale rights should be expressly addressed, specifying whether the distributor may appoint sub-distributors or resellers and under what conditions. Require flow-down obligations so sub-parties comply with branding, quality, and reporting requirements. Include approval processes for sub-distributors and require primary distributor liability for their actions. This approach preserves control over market representation and creates accountability for downstream partners.
Involve counsel early in negotiations to ensure commercial terms are translated into enforceable contract language and to identify legal or regulatory risks. Early involvement reduces costly revisions and ensures alignment between business objectives and legal protections. Counsel can also assist with due diligence, drafting protective provisions, and advising on dispute resolution strategies to preserve relationships while protecting your interests throughout the contract lifecycle.
