A sound licensing or distribution agreement protects revenue, defines obligations, and reduces litigation risk by setting measurable performance expectations and dispute resolution paths. It preserves brand integrity through quality control provisions, allocates risk with indemnities and insurance clauses, and establishes mechanisms for growth such as territory expansion and sublicensing permissions.
Detailed terms provide predictable outcomes for breaches, payment defaults, and quality issues, enabling businesses to plan financially and operationally. Clear allocation of responsibilities reduces ambiguity, making it easier to manage distributor relationships and enforce contractual rights when disputes arise.
Our approach focuses on aligning contract terms with business objectives, assessing commercial risk, and drafting enforceable provisions that support sustainable relationships. We work with owners, managers, and in-house teams to translate business needs into clear, practical contract language that supports operations.
When breaches occur, we pursue remediation through negotiated cures or formal remedies as appropriate. We also assist with contract amendments to reflect growth, regulatory changes, or shifts in distribution strategy, keeping agreements aligned with evolving business needs.
A licensing agreement grants specific rights to use intellectual property, such as trademarks, technology, or know-how, under defined terms like scope, duration, and limitations. Licensing focuses on permission to exploit IP while preserving ownership and control over how the asset is used and protected. A distribution agreement governs how a product is sold and delivered through a distributor or reseller network. It addresses sales responsibilities, territory allocation, pricing, and logistics rather than granting rights to the intellectual property itself, and it often includes performance obligations and reporting requirements.
Royalties can be structured as fixed fees, percentage-based payments on net sales, or tiered rates tied to sales volumes. Agreements should define calculation methods, timing of payments, acceptable deductions, and reporting requirements so both parties understand how revenue is measured and distributed. Minimum guarantees and advance payments can supplement royalty structures to provide predictable income for licensors. Provisions for audits and remedies for underreporting help ensure transparency and correct compensation over time without lengthy disputes.
Exclusivity clauses determine whether a licensee or distributor is the sole party authorized to sell or market a product in a defined territory. Important aspects include whether exclusivity is full or partial, duration, performance conditions, and any carve-outs for existing customers or channels. Territory language should be precise, specifying geographic boundaries or market segments to prevent overlap and channel conflict. Consider including performance benchmarks tied to exclusivity so the right is conditioned on measurable commercial activity and not just promised effort.
Audit rights are common to verify sales reports and royalty calculations. A practical audit clause sets the frequency and scope of audits, notice requirements, confidentiality protections, and cost allocation—often requiring the party that substantially underreports to reimburse audit costs. Limiting audits to reasonable frequency and scope protects both parties. Clear procedures for resolving discrepancies identified in audits, including timelines for payment adjustments and interest, help ensure audits are an effective compliance tool rather than a disruptive exercise.
Termination provisions should specify causes for termination, notice and cure periods, and the consequences of ending the relationship. Including clear default definitions and opportunity to cure helps avoid disputes and gives parties a chance to remedy issues before termination becomes necessary. To reduce liability risk, include mechanisms for orderly wind-down such as return or sale-back of inventory, protection of intellectual property post-termination, and confidentiality obligations that survive termination. Well-drafted exit terms promote an orderly transition and minimize business interruption.
Include quality control provisions that require adherence to standards for manufacturing, packaging, and customer service, and give licensors approval rights for branded materials or product changes. These clauses help maintain consistent customer experience and protect brand reputation across channels. Also require reporting on marketing activities and compliance with applicable laws and industry standards. Remedies for breaches of quality provisions, including right to suspend rights or require corrective actions, give licensors practical tools to enforce brand protections.
International distribution raises issues such as export controls, customs compliance, foreign regulations, and tax considerations. Agreements should allocate responsibilities for customs duties, compliance with local regulations, and product registration or labeling requirements to avoid legal exposure on cross-border sales. Currency, payment methods, and dispute resolution mechanisms also merit attention. Including choice-of-law and venue clauses, and considering arbitration or other neutral dispute resolution, can provide more predictable outcomes for cross-border disagreements and reduce enforcement uncertainty.
Conduct thorough due diligence on the IP being licensed or used to confirm ownership, chain of title, and the absence of conflicting rights. Include representations and warranties about ownership and non-infringement, and require procedures for handling third-party claims to allocate responsibility for defense and damages. Consider indemnity and insurance provisions to protect against third-party infringement claims. Having a clear process for notice, control of defense, and settlement restrictions reduces the commercial impact of infringement allegations and clarifies which party bears the risk.
Minimum purchase requirements can encourage distributor commitment and support predictable revenue, but they should be realistic and tied to market potential. Include clear measurement periods, remedies for failing to meet minimums, and escape clauses for significant market changes or force majeure events to prevent unfair penalties. When using minimums, balance expectations with incentives such as marketing support or tiered discounts. Providing mechanisms to renegotiate or temporarily suspend minimums in case of adverse conditions helps maintain relationships while protecting business interests.
Post-termination rights should address use of trademarks and IP, resale of remaining inventory, and customer transition responsibilities. Specify whether the distributor may sell existing stock for a limited period, and require cessation of promotional activities and return of confidential materials to prevent ongoing misuse of brand assets. Clarify obligations for outstanding payments, final accounting, and handling of warranties or returns. Including transition assistance and cooperation requirements can protect customers and preserve goodwill while minimizing disruption during the contractual wind-down.
