In a business, not all business people are able to produce and market their products. There are many business actors who have limitations to do marketing as well as sales for the products they make. Even so, business actors do not need to worry because cooperation can be carried out with other business actors, such as distributors. Distributors can help producers market their products by entering into an agreement. According to MOT Regulation No. 22/2016, distributors are business actors who carry out activities of distributing goods directly or indirectly to consumers in the country. Distributors can act on their own behalf but there must be an appointment by the manufacturer, supplier, or importer based on an agreement to carry out goods marketing activities. To become a distributor, business actors are required to fulfill several provisions, including:
- Formed as a business entity established and domiciled in the territory of Indonesia.
- Have a license in the field of trade as a distributor.
- Own or control a registered place of business and warehouse with a correct, fixed, and clear address.
- Have agreements with manufacturers, suppliers, or importers regarding the goods to be distributed.
About the Distributor Agreement
As mentioned earlier, to become a distributor, a business must have an agreement with a manufacturer, supplier, or importer. This agreement is known as a distributor agreement. This agreement contains cooperation where the manufacturer will grant distribution rights usually exclusively to sell products made under certain conditions. The agreement is made exclusively to limit the manufacturer’s authority to enter into distributor agreements with other parties. Just like any other agreement, the manufacturer and distributor are free to determine what provisions need to be included in the distributor agreement. Although they are free to determine the clauses, the agreement must still pay attention to the legal requirements of the agreement stipulated in the Civil Code, not contrary to law, and carried out in good faith. However, the clauses in the distributor agreement should cover the following important aspects, including:
- Scope of the distributor agreement.
- Term of the agreement.
- Information about the products sold including product availability.
- Obligations and ways of promotion or branding that distributors will do for the products to be sold.
- Prices and discounts given on products.
- Sales target.
- Sales report.
- Confidentiality.
- Correspondence.
- Force majeure or force majeure.
- Termination of the agreement.
- The manner of dispute resolution including applicable law.
To note that a distributor agreement is a mandatory requirement. So that distributors must immediately make an agreement when collaborating with manufacturers, suppliers, or importers. Remember, distributors who distribute goods without an agreement with producers, suppliers, or importers can be considered unlawful and subject to administrative sanctions in the form of :
- Written warning.
- Suspension of business license.
- Revocation of business license.
KH Contact
Well Friend KH, that’s an explanation of the things that need to be considered to become a distributor. For KH Pals who need help to make distributor agreements, want to do business consultations or have questions related to distributor agreements and other legal issues, do not hesitate to contact Kontrak Hukum at the following link Tanya KH or through our Instagram social media @kontrakhukum.
