The international trademark distribution agreement is the contractual instrument by which the parties effectively internationalize the entry of a trademark in another country (which can also be Brazil).
The internationalization of a trademark is one of the most desired goals of a company nowadays, be it Brazilian or foreign.
Why is that?
Because it is the cheapest, most economical way for a company to have its trademark in another country.
It is important that the Distributor (often the importer himself) has experience with sales and distribution in the target market.
For this to happen you need to make an international trademark distribution agreement.
This article applies to foreign trademark distribution contracts in Brazil and Brazilian trademark distribution contracts abroad.
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What is an international brand distribution agreement?
It is a contract whereby a supplier undertakes to sell a product or service to the distributor so that he sells to his consumer market.
It is a contract with the importer to distribute the brand in the target market, with the purpose of entering with the brand in that country or region in which the distributor dominates and the supplier wants to see his product.
This contract may contain a clause that guarantees the exclusivity of distribution in that territory.
In Brazil, Articles 710 to 721 of the Civil Code provide about agency and distribution contracts, as a general rule.
The clauses of this contract are stipulated by the parties
In Brazil, the Civil Code provides the general rules and it is up to the parties to agree on the clauses in the contract.
The parties must develop balanced clauses that provide for their wills so that the business deal can happen.
The Exclusivity Clause
Both international and national contracts may contain an exclusivity clause for the distribution of a product or service in a given territory. It is also a clause stipulated by the parties, respecting their will and the local laws (law of the contract’s conclusion).
I want to draw attention here to another clause that may be implicit in this one or separately:
Supply Quota and Acquisition
In the contract, it is important to stipulate the minimum annual quantity of goods to be purchased by the distributor, so that no surprises occur. It is also important to stipulate maximum quantities in case the target market is hot.
International Distribution
In international contracts, usually, there is an “adhesion” contract for the Brazilian importer to sign.
Please read this contract carefully, see all the clauses, and what you can and cannot do. Impose your clauses. Argue, discuss.
Don’t sign a foreign brand distribution contract for the Brazilian market if you cannot comply with it, after all the chosen forum of election is usually the city where the company is from. That is, it may be worth, depending on the value of the contract, to choose some extrajudicial method of conflict resolution, such as Arbitration.
Attention! Arbitration is not a cheap procedure, and when chosen in a contract it must be expressly written therein which Arbitration Tribunal is chosen, the arbitration clause, and everything else that refers to it. There can be no surprise in the choice of the institution of Arbitration and much less the prices.
Other important clauses
It is also very important to include in the contract the amount of the distribution, the term of validity (usually the term is fixed), the jurisdiction of choice, and the applicable law.
Also the clauses for termination of the contract and a fine for non-compliance with any other stipulated clause.
Along with this contract, you can also have miscellaneous ancillary contracts.
The list of goods to be distributed and the prices should also be included so that there are no surprises.
How to find distributors around the world
My tip is to look in the Chambers of Commerce of the countries you are interested in.
I also suggest attending international fairs, when you can visit the desired country to meet the distributor. If it happens during the virus pandemic (now covid-19), everything will happen online.
Check the information.
Don’t buy anything counterfeit. Don’t work with counterfeit products.
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