Is your business exclusive?

Exclusivity – is this the way to go?

While international trade may start initially with one or two sales to a contact as sales pick up, it is likely that any business will look to have someone local, based in the relevant country, acting for them – either as an agent or as a distributor.

One of the points which usually comes up in negotiations is whether the local representative is to be appointed on an exclusive basis.

Usually, the local agent or distributor requests it – arguing that if they are going to put effort (and money) into promoting sales for you, they want the security that you won’t sell direct or appoint someone else who will compete with them.

But if appointing someone local in a new territory where you are unsure how sales will go, this is worth thinking about carefully.

Exclusivity may not be so big an issue if you can terminate the agreement on a reasonable period of notice.

But if not, it’s important to build in some form of sales target so that if they are not achieving target you could consider appointing someone else.

Otherwise, the risk is that you find yourself tied into a long term exclusive arrangement and unable to appoint another representative you think would do a better job for you.

Of course, this isn’t just for international sales, you may want to appoint someone in another part of the UK.

So however informal the arrangement, make sure you look out for the word and think about whether that is really what you want.

Scott Kerr is a partner in the Corporate Department of Harper Macleod LLP, Solicitors.