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7 important legal issues when selling branded products

Today, branded products not only embody fashion and luxury, but also a brand experience and an attitude to life that often begins for the customer when the branded product is purchased. With their high quality, their intensity of advice and often complexity, they also pose legal challenges to the sales system and dealers, who are supposed to convey the brand image in the sense of the brand manufacturer. You should therefore think about the following points when selling:

##1. Exclusive or selective?

The question "exclusive or selective?" can also be described as the key antitrust question of selling branded products. In order to make the best possible use of the scope for design provided by European antitrust law, which also applies in Germany, these two types of sales are available to you as alternatives: Would you like to use your sales partner exclusively in certain areas with the advantage that he/she assumes market responsibility for the area and the Active sales to other territories are excluded, but not passive or Internet sales or sales to "outsiders"? Or do you want to select your sales partners according to certain criteria with the advantage that they are only allowed to sell to authorized dealers and end customers, but not to outsiders, even if you cannot assign them "order" areas? The clarification of this question is usually the starting point for the design of the sales system and your partner contracts, because many follow-up questions depend on it. A combination of both options at the same level of trade is only permitted to a limited extent, so this question is of crucial importance, no matter how large the area in which you want to sell is.

###2. Avoidance of compensation claims

When drafting a contract, the risk of your partner claiming compensation when the contract is terminated is often overlooked. Compensation claims depend on your affiliate's commissions/profits and can be very expensive, especially since you are likely to use multiple affiliates. There are ways to avoid these high payments and still contract a well-knit collaboration between you and your partners.

####3. The internet sales

The sale of branded products over the Internet causes concern for many brand manufacturers if Internet sales do not do justice to the brand image. However, an exclusion of internet sales is inadmissible under antitrust law because the legislator considers internet trade to be particularly important for the integration of the markets in Europe. This may be beneficial for the consumer. However, as a brand manufacturer, you do not have to accept every form of Internet sales from your dealers. It is therefore not the "if" that is decisive, but the "how" of online trading by your dealers. Use the scope of European antitrust law to your advantage by effectively determining the quality requirements for internet sales in your contracts.

####4. rights to issue instructions

In order to secure the brand image of your branded products, all partners must pull together with you in sales and marketing in order to convey a uniform "brand feeling" to the end customer. You therefore secure the right in your contracts with your partners to issue instructions, for example in the form of guidelines. However, these instructions must be reasonable. In order to implement your sales system uniformly in practice, you need legal certainty when dealing with your partners.

####5. Dealer warranty work

Branded products can also trigger complaints from your end customers. If you grant guarantees in addition to the statutory liability for defects, the subsequent question arises as to who provides guarantee services to the end customer, you or your sales partner. If your partners are well versed in handling the products and they also have the necessary technical understanding, it can make sense to entrust your sales partners with carrying out warranty and defect work, but only for a reasonable fee. In addition, the partner's own rights in the event of defective products may not be curtailed without restriction. Various solutions are possible here, which you might want to use for yourself.

####6. The execution of the contract after termination

If a partner relationship proves unsustainable and you or your sales partner decide to end the partnership, the matter is often not settled. Rights and obligations may still arise from the termination. For example, your sales partner might be interested in not being stuck with stock items. If he was obliged to keep a warehouse, you as an entrepreneur are usually also obliged to take back such a warehouse. However, the scope of your obligation can be defined in the contract, for example whether you have to pay back the full purchase price. In addition, it can be decisive who is primarily responsible for the termination of the contract. This is just one of many points that should be regulated in order to process the contract after termination.

####7. The controversy

If an amicable solution to a conflict with a partner is not possible, there is sometimes no way around going to court. Here you need a representative who is familiar with sales law issues and, above all, has experience in representing your position in court.

Anwalt Gesellschaftsrecht und Handelsrecht

dr Andrelang, LL. M

Specialist lawyer for international business law

Specialist lawyer for commercial and corporate law


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