Here is a good work lesson. It's pretty specific, but definitely isn't obvious -- sometimes it's a good idea to have contractual agreements with your dealers or distributors, and other times it isn't. And where you do have contracts, it is critical that they conform to local laws.
Within the United States, commercial contractual arrangements are regulated by state laws -- either the general commercial code for that state, or more specific statutes governing your type of relationship. In many states, it seems like the laws were set up to favor local car dealerships in their "struggles" with automotive manufacturers. They cover things like notice periods on cancellation, cure periods, and the buyback of inventory. Because these laws vary considerably from state to state, it is important to know what you can and can't do before you start to do anything that impacts territory, length of the agreement, renewals, inventory requirements, and similar things.
But what's a supplier to do? Learn the details of fifty different laws -- laws that can change seemingly at the drop of a hat? Can't you write a contract with your dealer/distributor that is universally valid in the U.S.?
If you try going that route, it's likely the agreement will be so weak, that you'll be completely hamstrung. One advantage of a universal agreement, however, is it does set expectations for you and your distribution partners. And you only have one agreement to learn (and remember). If you make the contract too restrictive, however, it is likely some paragraphs won't stand up in some states.
If there's no contract, then general commercial law in the state prevails -- which might be even more disadvantageous to the supplier.
So what's the best strategy?
In the United States, I suggest having a very knowledgeable attorney write a universal contract -- one restrictive enough to give you some options when your distributor doesn't perform. You also need to have that attorney check the relevant state law before you make an major changes in a relationship.
Outside of the United States it is a different ball game altogether. Laws in the U.S. vary a lot. Internationally, they vary even more.
In one instance, I was sued by an international dealer for hundreds of thousands of dollars for "brand development" he had supposedly done on my behalf. Of course, we were cancelling him for non-performance, but in this particular country, since we had a contractual commercial relationship, he could come after us. And he did. And it cost big bucks.
I later learned that if we hadn't reduced the relationship to a contract, we would have been subject to general commercial law, and the "brand development" stuff would have been excluded.
Outside of the U.S., you will, unfortunately need to ask a local attorney what is the best policy. It is a slow, tedious and expensive process, but done correctly, it can save you bundles later. Absolutely don't just take your U.S. agreement and have your non-U.S. distributor sign it -- you could be setting yourself up for some huge problems down the line.
