Distribution agreements aren’t just for shifting boxes. Whether your business offers physical goods, SaaS platforms, digital content, or bundled services, a well-structured distribution model can help you scale faster, reach new customers, and stay lean.

But with reach comes risk. And that’s where you come in.

Here’s a breakdown of what to look for - and how to make sure your distribution agreements protect the business while keeping commercial teams moving.

What counts as “distribution” now?

Traditionally, distribution meant selling goods via third parties who buy and resell them under their own name. But in today’s service-driven economy, the model’s evolved.

You might be dealing with:

• Channel partners reselling software subscriptions.
• Franchise-style models for digital platforms or training services.
• Third-party reps distributing licensed content or embedded tech.

Whether it’s a physical product, a cloud solution, or a bundle of both, the legal structure and commercial risks look surprisingly familiar.

Six key clauses that still matter

Regardless of what’s being distributed, these areas are worth your time and scrutiny:

1. Territory and exclusivity

• Define who can sell what, and where. Avoid overlap with other partners or internal sales teams.
• Tie exclusivity to performance or milestones, especially in new markets.
• For digital services, watch how “territory” interacts with licensing, data rules, and user access.

2. Licensing and IP use

• Be explicit about what the distributor is allowed to do with your software, brand, or content.
• Retain all ownership and include audit rights or usage reporting where appropriate.
• For anything IP-heavy, clarify sublicensing rights, branding controls, and restrictions on reverse engineering or modification.

3. Revenue share and payment

• Clearly set out how pricing, billing, and revenue splits work - especially if the distributor is collecting payment from end users.
• For SaaS or recurring services, define who owns the customer relationship and who handles renewals.

4. Compliance and regulatory responsibilities

• For products, this might cover labelling, safety, or product warranties.
• For services, think data protection (especially if there’s access to user data), export controls (e.g. for software), and sector-specific rules (e.g. healthcare, finance, edtech).

5. Customer insight and control

• The business will want visibility on customer behaviour, feedback, and revenue. Build this in via reporting, shared CRM access, or defined engagement rights.
• For anything with a service element, clarify who handles support, SLAs, and service credits.

6. Termination and transition

• Include clear rights to exit for breach, convenience, or performance failures.
• For digital or service offerings, cover handover of customer data, platform access, or brand representations post-termination.

A few things to watch for

1. Blurring the lines between distribution and agency
   In service models, the lines can get fuzzy. Make sure you’re not inadvertently appointing the distributor as your agent (which can carry extra legal obligations).
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2. Data protection blind spots
   If your distributor has access to personal data, clarify roles and responsibilities. Are they a processor, a controller, or something else? The contract should spell it out.
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3. Brand risk
   Wherever your brand is involved - on software, documentation, or customer comms - set clear usage rules and a route to revoke access if things go wrong.

Summary

Whether you're distributing hardware, software, or something in between, the legal levers are similar - and the stakes are high. The best distribution agreements make expectations clear, protect your assets, and give you a route out if the relationship sours.

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