Tips from Centra Lawyers

What are agency, distribution and franchise agreements?

An agency agreement is a legal contract creating a fiduciary relationship whereby the principal agrees that the actions of the agent binds the principal to agreements made by the agent as if the principal had himself personally made these agreements.

A distribution agreement is a contract between a supplier and a distributor whereby the parties agree that the distributor may sell (distribute) the products of the supplier on an exclusive (or non exclusive) basis. Example: where a hardware chain may sell a range of electric garden products to the public.

A franchise agreement is a legal contract whereby a well established business (franchisor) consents to provide its brand, operational model and required support to a third party (franchisee) for them to set up and run a similar business in exchange for a fee and some share of the income generated (royalty).

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