Before you grant an overseas distributor exclusivity, ask these 12 questions

A distributor that has shown interest in your product asks for exclusive rights for a territory, usually for three to five years, with a purchase target attached. The request sounds like commitment. In practice it is a transfer of your options: for the length of the term, you have agreed not to sell through anyone else, and often not directly.

The questions below are grouped in the order a decision usually meets them. None of them requires a lawyer to ask. Several of them require a document.

Why exclusivity is different from every other term

Price, payment and delivery can be renegotiated when circumstances change. Exclusivity cannot, easily. It removes your ability to test the market through a second buyer, it can outlast the distributor's interest in your product, and it usually survives the people who signed it. A distributor that cannot import your product for resale has still been granted the territory.

The company

1. Which legal entity will hold the rights? The entity named in the agreement, not the trading name on the presentation. Ask for its registration extract. If the entity is a subsidiary created for this product, say so in the agreement.
2. Who owns and controls it, and who signs? Ownership affects continuity. Authority affects enforceability. A signature from someone without board authority binds nobody.
3. What has it done with comparable products in the last three years? Ask for imports, customers and sales of a similar product line, redacted if necessary. A distributor with no comparable line may still be the right partner, but you should know that before you grant the territory.

The route into the market

4. Which licence route will it use to import for resale? This is the question that most often has no answer. The licence category must fit importing finished goods for resale, not just importing for the company's own production. In the illustrative case on this site, the records show a producer import category while the appointment needs resale. That is a question to resolve, not an accusation. Resolve it in writing before signature.
5. Which registrations does your product need, and who holds them? Some products need a product registration, a standard mark or an approval before sale. Ask which one applies to your models, who will hold it, and how long it takes.
6. What happens to the registration if you change distributor? If the distributor holds it, leaving them may mean starting again. Where the law allows, consider holding the registration in your own name or requiring transfer on exit.
7. Who bears the cost and risk if the goods are held at the port? A missing surveyor report, a classification dispute or a rejected certificate of origin all cost money and time. The agreement should say who pays and who carries the delay.

The money and the target

8. What is the minimum purchase, measured how, and over what period? A target measured in value, units or purchase orders produces three different behaviours. State the measure, the period, and what happens if it is missed.
9. What is the payment term, and what happens when a payment is late? A payment reference that worries you is worth more attention than a discount. Ask what the remedy is, and whether it suspends the exclusivity.
10. What resale price and margin does it expect, and what is that based on? A margin calculated on a guess about landed cost is not a plan. Ask for the landed cost it assumed and the resale price it expects.

The exit

11. What ends exclusivity, and how quickly can it be ended? Missed targets, non-payment, change of control and a regulatory failure should each be named as an event, with a notice period that gives you time to act.
12. What happens to stock, registrations and customers on exit? A buy-back of stock, a transfer of registration and a defined handover of customer relationships are the three things that stop the exit becoming a second loss.

What public records can and cannot tell you

Registry and licence records can establish identity, registration and licence category, and whether the company is active. They cannot establish trading volume, payment behaviour or the quality of the relationship with its existing brands. Those come from references, import history and the distributor's own numbers. A check reads both and says which is which.

What to do when an answer is missing

Write it down, name who can close it, and put a date on it. If the appointment has a deadline, an unanswered question is itself a reason to delay signature rather than a gap to be filled later. The worked example on this site shows what that looks like in practice: an unresolved import route, four conditions that would change the recommendation, and a decision status rather than a verdict.