Distribution relationships are governed by contract and, in many industries and states, by protective statutes that override the contract.
Statutory protections. Dealer, franchise and distributor statutes commonly require good cause for termination, advance notice with an opportunity to cure, and repurchase of inventory, parts and special tools at defined values. They often apply regardless of the contract’s choice of law and forum.
Franchise definitions are broad. Many arrangements not called franchises meet the statutory definition — a marketing plan or community of interest, use of the supplier’s trademark, and a required fee, which some statutes find in ordinary inventory purchases.
Exclusivity. Territory, customers or product lines; whether the supplier may sell direct; and treatment of internet sales, which is now the most contested term in most of these relationships.
Performance standards should be objective and measurable, since they are the usual basis for asserting good cause.
Termination and wind-down. Notice periods, cure rights, post-termination sales of remaining inventory, treatment of pending orders, and repurchase obligations.
Antitrust. Resale price arrangements, exclusive dealing and territorial restrictions are analysed under a rule of reason in most respects, but the analysis should be done before the programme is designed rather than after a complaint.