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Securing an exclusivity deal on a product - advice.

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  • 04-04-2008 8:37pm
    #1
    connundrum
    Registered Users Posts: 5,563 ✭✭✭


    Hi,

    A friend has a 5 year old business and is doing rather well. He has come across a company abroad who can supply a far greater product than what is available to the UK and Irish market at the moment i.e. cheaper and with better facilities.

    He has already placed a €20k order (I think each unit retails at around €6 so its a substantial order in that way), and plans to do more business with this guy.

    He's asked my advice on the deal and the first thing I suggested was that as soon as he starts putting this product around, other suppliers will just contact the producer directly - thereby giving him a very small window of opportunity. I suggested trying to set up an exclusivity deal, trying for a longterm deal but being able to settle for a 1 -2 year deal.

    How does he do this? How does he make it enticing to the producer, and how does he go about trying to nail it down i.e. contract wise?

    Any links etc would be helpful.

    I don't know what other detail to give but I'd appreciate any help.

    Thanks
    Dave


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    #2
    boomer_ie
    Closed Accounts Posts: 392 ✭✭boomer_ie


    connundrum wrote: »
    Hi,

    A friend has a 5 year old business and is doing rather well. He has come across a company abroad who can supply a far greater product than what is available to the UK and Irish market at the moment i.e. cheaper and with better facilities.

    He has already placed a €20k order (I think each unit retails at around €6 so its a substantial order in that way), and plans to do more business with this guy.

    He's asked my advice on the deal and the first thing I suggested was that as soon as he starts putting this product around, other suppliers will just contact the producer directly - thereby giving him a very small window of opportunity. I suggested trying to set up an exclusivity deal, trying for a longterm deal but being able to settle for a 1 -2 year deal.

    How does he do this? How does he make it enticing to the producer, and how does he go about trying to nail it down i.e. contract wise?

    Any links etc would be helpful.

    I don't know what other detail to give but I'd appreciate any help.

    Thanks
    Dave

    I am told that under EU regulations what you are looking for isnt possible. Also there is absolutely nothing you could do if a competitor in Ireland sourced the same item from the UK say and started undercutting your friend. The original manufacturer and your friend would have the "exclusive" contract but the competitor would not be a party to that contract and therefore you could not enforce the terms of exclusivity on them.

    I am speaking from the competitor end of things, there is a supplier with an "Exclusive supplier" contract for Ireland for a particular product that I was able to source from another supplier (who were aware that it was being sold in Ireland and stated that the manufacturer had stated that there was no problems with me reselling the item involved). My competitor (who sell the item for €1,000 more than me) then tried to scare me off with solicitors letters. I contacted them and told them to cease and desist as I was not a party to their "exclusive" contract and that no court in the land would force me to be a part of their exclusive contrat.

    There is a precedent case (i think the solicitor called it) dating back a good few years relating to tyres that backs up my side of things.

    Shane


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