Exclusive distributor

An exclusive distributor is an independent distributor granted an exclusive right to market a supplier's products within a defined geographical territory. The supplier commits not to sell directly or appoint another distributor in that territory.

Exclusivity implies reciprocal obligations:

For the supplier:

Not to sell directly in the granted territory
Not to appoint another distributor
To supply the distributor on a priority basis

For the distributor:

To achieve minimum sales targets
To maintain sufficient stock levels
To provide after-sales service
Not to market competing products (non-compete clause)

In the EU, territorial exclusivity is governed by the Vertical Block Exemption Regulation 2022/720. The exclusive distributor cannot be prevented from responding to unsolicited orders from other territories (passive sales). Only active sales into other exclusive territories may be restricted.

The duration of an exclusivity agreement is typically 1 to 5 years with renewal options. Reasonable notice is required in case of non-renewal.

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