Selective Distribution

WHAT?

One of the common types of distribution agreements are selective distribution agreements. In a system of selective distribution, the supplier undertakes to sell the contract goods or services, either directly or indirectly, only to distributors selected on the basis of specified criteria and these distributors undertake not to sell such goods or services to unauthorised distributors within the territory reserved by the supplier to operate that system.

By way of selective distribution, a supplier thus creates a network of authorised distributors. The admission to the network can be subject to purely qualitative criteria only, or additionally to quantitative criteria, which limit the potential number of distributors more directly by, for instance, requiring minimum or maximum sales or fixing the number of distributors.