First steps into international distribution

As counsel to entrepreneurs and business development managers, I am constantly engaged in projects related to opportunities to increase a company’s revenue, and one of them may be to identify and establish a distribution channel overseas.

Entrepreneurs and managers will agree with me that there are equally effective approaches to find the right overseas partner. These may include peer-to-peer references, specific industry research (which may include contacts with professional and sector associations), or contacts enabled by bilateral chambers of commerce.

I will elaborate on key elements of the entrepreneur’s decision to go overseas in the next posts.

In any case, first things first, I am convinced that a contractual framework is required for the first step. In my view, the process of identification of a distribution partner must necessarily start with a non-disclosure agreement with the potential partner.

A later question will come if it may be a one-way agreement or if there will be bilateral exchanges. We will touch this point soon.

The simple fact that your company decides to explore a new market is “per se” confidential information until you finally have your product or service landed on that new territory. And seldom will you not share relevant information of your business or plans with a potential partner.

The practice of signing a simple and objective non-disclosure agreement is widely acceptable in the world of business affairs, is professional and gives your business the importance it deserves. The non-disclosure agreement should precede your first conversation since you may share critical and strategic information as part of your potential partner’s investigation to accept a distribution opportunity.

My take, out of own experience, is very simple: it is never too hasty or too formal to require from your potential distribution partner to sign a non-disclosure agreement. Beware, however, of those who may be rejecting it or simply “playing it down” as ways to avoid this responsibility. Not a good signal to know that a potential partner is neglecting confidentiality, a basic element for the success of your overseas distribution business.