A Business Lyceum Attendee once asked me this business question.
I’d like to call upon your expertise and years of experience … I have come across a manufacturer in China that manufactures a product that would appeal to the market here in the U.S. Therefore, I contacted the mfr. and expressed my interest to be an agent for them in the U.S. They responded by saying that they welcomed my inquiry and that they are in fact, in need of an agent for the U.S.
What I want to do is get exclusive distribution rights for their product in the U.S. Since I’m a novice at this, I would appreciate your direction. What should my next step be?
Since the manufacturer in China has already expressed an interest in establishing an agent in the U.S., all you have to do now is negotiate a deal with them.
If I were doing it (as I have before), my next step would be to write them a letter; something like this …
Dear Mr. (use the name of the person who responded to your inquiry):
Thank you for your kind response to my letter of (date).
In response to your letter of (date), my company would consider it an honor to represent your product(s) in the U.S. (or, the U.S. & Canada; or, North America) on an exclusive basis.
To that possible end, please provide us with your lowest possible distributor prices, along with quantity breaks, quoted CIF (name your nearest U.S. Port of Entry).
We have taken the liberty to enclose herewith a preliminary contract for your consideration.
Thank you for your consideration. We are looking forward to hearing from you at your earliest convenience.
Along with the letter, enclose a contract for their consideration. You may want to have your attorney assist you in creating the contract in the proper legal form. The contact could be something like this …
EXCLUSIVE SALES AGREEMENT
This AGREEMENT is made on the dates signed below, by and between (your name) of (your address); hereinafter referred to as (your one-word name), and (the Chinese company name) of (their address); hereinafter referred to as (their one-word name):
WHEREAS (Chinese company) is the manufacturer of (name of product) and is desirous of having said product distributed in the U.S. (or, the U.S. and Canada; or North America); hereinafter referred to as “territory,î and,
WHEREAS (your company) is a distributor of such products in the above stated “territory;”
IT IS AGREED by the parties above named, in consideration of the promises and covenants hereinafter contained, as follows:
1. (Chinese company) grants to (your company) the exclusive sales and distribution rights to (name the products) throughout the above “territory.î
2. (Your company) agrees to diligently sell and distribute (name the products) in accord with the terms and conditions of this agreement.
3. (Chinese company) agrees to turn over to (your company) any and all orders and inquiries regarding stated product(s) it shall receive from the “territory.”
4. (Chinese company) will provide (your company) with all technical data regarding the products; sales literature, brochures, catalogs, etc. currently in use for the product(s); and any and all future improvements (Chinese company) may develop relative to such product(s).
5. (Your company) agrees to buy the stated products exclusive from (Chinese company) and refrain from marketing similar products in competition with (Chinese company).
6. (Chinese company) agrees to maintain production capacity capable of supplying the orders
produced by (your company).
7. (Your company) agrees to sell a minimum of XXX units (the quantity of products you plan to sell) of (Chinese company) product(s) during the first year of this agreement. Should (your company) not sell XXX units within the first year, it shall be to the determination of (Chinese company) whether or not this agreement shall be continued for additional years. This agreement shall renew automatically for additional years so long as a minimum of XXX units of the product are sold each year. (Define what one unit of the product is to be.)
8. (Your company) shall have the sole discretion to determine the methods of merchandising the products under this contract.
9. (Your company) has the unfettered right to, and may, assign its rights and obligations under this agreement to a third party.
We, the undersigned, agree to the terms and conditions of this agreement on the below written dates.
Note: Be sure the products you are going to be selling can legally be imported into this country. One time, in the mid-1960s, I had the exclusive rights to sell a “Magnetic Therapy” machine from Japan in the U.S. Only problem was, the F.D.A. forbid its import because of its unfounded medical claims. Today — over 30 years later — Magnetic Therapy has gained acceptance — without F.D.A. approval. So, check the product out with the Department of Commerce before you agree to sell something.
Although I, personally, have used letters and agreements similar to the above over the years, I went to the works written by the known authority on Exclusive Distribution Rights — the man the media call “The Millionaire Maker” — my dear friend, E. Joseph Cossman (may he rest in peace). For most of the wording above, rather than digging through my own archives, it was easier to find a draft copy in Joe’s course and edit it for you.
If you are really and truly interested in acquiring Exclusive Distribution Rights to products and, more importantly, learn how to effectively market those products once you have the exclusive rights, do yourself a favor: Go to your local bookstore and buy any book you can find by E. Joseph Cossman. Then again, if you wanna get the best of Joe’s material, go directly to his website at http://www.cossman.com and take a close look at his “Home Study Course.” You’ll be glad you did!
This article was written by J.F. (Jim) Straw, also known as “The Five Hundred Million Dollar Man.” If you liked this article, then you’ll love Jim Straw’s best selling book Mustard Seeds, Shovels, & Mountains: How to Succeed Using Your Physio-Psychic Power because it is one of the few books that will actually show you how to succeed step-by-step. (See chapter 16.)