Vertex Law

Common commercial arrangements

by Irfan Baluch

Irfan Baluch of Vertex Law's Technology & Media Team highlights four common mechanisms by which products and services are commercially exploited.

Having expended (usually considerable) effort and resources in developing products or services for your business, it is important to ensure that the most appropriate mechanism is utilised when commercially exploiting your products and services.

This schematic focuses on the four most common commercial arrangements.

We have set out just a few points to consider, in what are often very detailed and highly structured agreements.

1. Direct Sales

Direct sale of your products and services to your own customers.

2. Licensing / Franchise model

You grant permission to a Licensee to manufacture and sell the products according to your specifications and under your trademarks.

3. Distribution agreement

You sell to a Distributor who then sells the products on to Customers in his own right. The contract is between the Distributor and the Customer directly. The Distributor sets his own price.

4. Agency agreement

You sell to a Customer using an Agent who facilitates the sale. The contract is between You and the Customer directly. The Agent gets commission on sales.