Manufacturer Rep Agreement

What should you look out for in your manufacturers’ representative agreement?

  1. Purpose and Appointment – Have the duties of the manufacturer and the representative clearly laid out with regard to such activities like advertising, promoting, and physical distribution.
  2. Confidential Information – Confidentiality clauses are important for both sides of the agreement, it can be important to you as the representative to not have the manufacturer sharing information about your operation or other product lines you carry. On the flip side, manufacturers like confidentiality clauses regarding their own products as well and voluntarily including once can bring you good will.
  3. Non-Competition Agreements – Manufacturers will usually try to slip these into rep agreements. Make sure you’re comfortable with the terms both time wise or geographically.
  4. Nature of the Relationship – Be sure to agree on items such as:
    1. Sales Price
    2. Commission
    3. Timing of Payment
    4. Offsets and Charge-Backs
    5. Expenses
    6. Taxes
    7. Payment Terms
    8. Agreement Termination
  5. Warranties – The Manufacturer should be clear about what warranties they represent and which they disclaim including express warranties, and the implied warranties of merchantability, and fitness for a particular purpose.
  6. Indemnification – This is an important section that should provide verbiage that in the case of a products related claim, the manufacturer will defend, hold harmless, and indemnity the representative. You should use any leverage you have to get this section included.
  7. Insurance – Is your manufacturer requiring you obtain insurance coverage? Do they require products coverage? A commercial general liability policy with products and completed operations coverage will be more expensive than one without it so find out exactly what your manufacturer is requiring.

These are but a few of the sections you should look out for and spend time on when negotiating your manufacturers’ representative agreement. Contact the experts today at Kirkwood Insurance and we’ll review your contract and get you on the right path with regard to your business.