Commercial distribution contract

To become an individual entrepreneur, the first step is often to marketing a reputable brand for starting your own business. Then we will analyze what business model between commercial distribution contracts can be convenient. In addition, we will collect all the relevant documents in order to start our activity.

Commercial distribution contracts: Concession, franchise and estimate contracts

Exclusive concession or distribution

They are contracts for which a producer or manufacturer agrees with a distributor to supply their brand for resale in a given area. Basically, the dealer buys at a lower price from the general of the market finding the profits in the resale. The classic example of this type of contract is the car dealership.
You should make a concession when:
  • You are an independent businessman.
  • You are not interested in being under the guidance of another company. This contract allows us to assume full responsibility for the operations, including the risks. As well as being able to establish your own way of trading.
  • You want to market a certain brand with continuity in time, setting an establishment and clientele.
  • You want the exclusivity of the sale of those products in the area.


In the franchise, the production company or manufacturer allows the franchisee to commercialize their products or services in a homogeneous way under their brand and symbols (logo, slogan, image…). Providing also their technical knowledge, in exchange for payment of a fixed entry fee and a periodic “canon” that is normally calculated according to the sales.

Unlike the previous one, it does not usually have exclusivity pacts, as the manufacturer can decide who enters the franchise. Although it is advisable to agree on the contract itself the rules of competition, thus avoiding the risks due to the saturation of the market.
It is very interesting to hire a franchise if:
  • You’re an independent businessman. 
  • You want to sell certain quality products shown in the area. 
  • You are nterested in being under the guidelines of the company that owns the brand. Being able to profit from its commercial symbols, its experience in the “know-how”…
  • You want to assume less responsibility, since the brand will be responsible for the defective products and the unsold ones.
  • You want to market a certain brand with continuity in time. So you can set up an establishment and clientele, and use your image on the premises.

Estimate contract

This commercial contract is usually held by manufacturers or wholesalers with retailers, by which the manufacturer delivers the products for the trader to sell them within a term. Despite the fact that the wholesaler delivers the products, the retailer does not acquire the property, but only owns them until they make the sale by winning a commission.
After the agreed period, you must pay at the price stipulated for the products you have sold and return those that you have not sold, or until your sale them.
The advantages of this distribution contract with respect to the above are:
  • The investment is much smaller. Initially you don’t buy the products but you pay for sales at a reduced price compared to the market. 
  • The benefit is received mainly in the commissions for sale.
  • The retailer assumes the risk of damages to the goods, and would have to pay them to the wholesaler.
Once the commercial distribution contracts have been known, you can decide which business model is best suited for your needs.
Contact our specialists for detailed legal advice on these contracts as well as the Constitution of the most suitable company for your business.