Protect your business and product idea with well-drafted manufacturing, distribution, and licensing agreement.
A manufacturing agreement is an agreement between a manufacturer and a company to develop and/or produce a company’s product. Manufacturing agreements memorialize the material terms between the parties and may include, where the product will be manufactured, the method of manufacturing the product, the type of raw material which will be used to manufacture the product, industry standards that will be used in the manufacturing, quantity, price, apportionment of liability between the manufacturer and your company, intellectual property rights of the product (licensing information), ordering processes and procedures between the manufacturer and your company and mode of delivery of the product.
A distribution agreement is an agreement between the supplier of a good, which can also be the manufacturer and the distributor of the good or product. Many of the terms found in a manufacturing agreement are also found in a distribution agreement and vice versa. A distribution agreement contains terms such as: who is responsible for the shipping cost of the product from the manufacturer or company to the distributor or directly to the customer, return cost, indemnification provisions between the parties, licensing rights to market the product, distributor’s cost of the product and risk/loss provisions as to when the risk of loss passes to the company, manufacturer and the distributor.
Often you will also find provisions in a distribution agreement that limits the distributor’s marketing, packaging, and presentation of the product, along with sales performance provisions, whether the distribution rights are exclusive or non-exclusive, and the geographic definition of territory in which the distributor can distribute.
License agreements or licensing agreements are agreements between two parties, the Licensor (owner of the product to be licensed) and the Licensee (the party who wants to use the Licensor’s product). A license agreement defines the parties’ relationship as it relates to the use of the Licensor or owner’s product. For instance, a license agreement may grant the licensee a right to replicate the licensor or owner’s product and resale it infinitely or for a definite period of time. The licensor may also grant the licensor the right to use the logo which relates to the product for marketing purposes or even add it to an existing product. The licensee in turn pays the licensor for the right to use or replicate the owner’s product.
There are three different types of licensing agreements. Each type of agreement defines the limitation on the licensee’s right to use the product. The licensor may grant the licensee an exclusive right to use the product. Exclusivity can be defined in various ways, it can be complete i.e. that licensee is the only entity that can use or resale the licensor’s product (even at the exclusion of the licensor) or it can be an exclusive agreement limited to a certain geographic location and/or time period. A non-exclusive license agreement, is basically the same as the exclusive agreement, except that the licensee is not given a “favorite” status and the licensor can license the product to as many licensees as it desires, therein opening the door for competition among licensees. There is also a third type of license agreement, which is the sole licensing agreement, meaning that only the licensor itself holds all rights to the product and will likely manufacture the product itself as well.
Regardless of whether you just need a licensing agreement or a combination of all three of the agreements discussed above to suit your business’s needs, your agreement must also contain well-drafted provisions protecting your business from improper use of your product or information learned during the process (such as soliciting or diverting clients or vendors) and disclosure of your company’s commercially sensitive information and trade secrets. These are the types of provisions that you typically find in a confidentiality, non-disclosure, non-compete or non-solicitation agreement.
Finally, no agreement of this nature is complete without a comprehensive dispute provision that addresses issues such as governing law, venue for dispute, personal jurisdiction over the parties, conflict of law issues, dispute method: arbitration or trial and attorney fees and cost in the event an action is brought.
Manufacturing, Distribution, and License Agreements require an attorney which is experienced in complex business and international legal matters and preferably an attorney who understands the nature of business and has a strong financial background. Here at the Campbell Law Group, we have extensive experience in drafting M&D and licensing agreements, including agreements that deal with cross-border transactions and jurisdictional issues that need to be taken into consideration when entering an agreement with an international manufacturer or distributor.
Our firm can draft an ironclad manufacturing, distribution, and licensing agreement for businesses in every area of Florida. Our firm also offers online communications, so we can facilitate seamless communication with you and your business whether you are located in the Panhandle, the Keys or anywhere in between. For more information regarding how our firm can help you, please contact us.