Dealer Franchise Agreements

Many international businesses use dealer franchise agreements.

A dealer franchise agreement is a common contract for distributing products. Various industries, such as automobiles, farming, electrical appliances and petroleum products commonly use dealer franchise agreements, according to "Harvard Law Review."

Selling Rights

In a dealer franchise agreement, the manufacturer grants specific dealers the right to sell the manufacturer's product. Usually, the right to sell is limited to defined geographic areas.

Market Development

Typically, a part of the dealer franchise agreement consists of the retailer promising to help develop markets for the manufacturer's product. In return, the manufacturer promises to only distribute products through an exclusive group of retailers.

Agreement Advantages

Dealer franchise agreements create a more-efficient relationship between manufacturers and dealers. The manufacturer may also provide extra maintenance assistance and administrative services as a part of the agreement. Manufacturers may also assist in marketing and advertising initiatives.

References

• Harvard Law Review: Dealer Franchise Agreements