Commercial distribution contracts are essential tools for any company seeking to bring its products or services to market. Behind business strategies often lie contracts governed by mandatory legal provisions, which are frequently overlooked but can lead to serious financial and legal consequences when a contractual relationship is terminated.
The Commercial Agency Agreement: Strong Protection for the Agent
A commercial agency agreement grants the agent the authority to negotiate or conclude contracts on behalf of a principal.
In Belgium, this status is strictly regulated by the Code of Economic Law and provides significant protection for the agent. Many companies are unaware that roles such as sales director, key account manager, or independent consultant may be reclassified as commercial agency agreements, with all the consequences this entails.
If the contract is terminated by the principal, the latter is generally required to grant the agent compensation for clientele developed during the relationship, which remains with the principal.
In addition, strict rules apply concerning notice periods and non-compete obligations. Prevention therefore requires the correct identification of the contractual relationship and appropriate contractual adjustments.
The Exclusive Distribution Agreement: The Weight of the Notice Period
An exclusive distribution agreement grants a distributor the exclusive right to market products within a defined territory.
It is also governed by mandatory provisions that protect the distributor. In the event of termination by the supplier, the law requires a reasonable notice period and, in most cases, compensation to cover investments made and the customer base developed by the distributor.
Disputes most often arise over the length of the notice period, which may reach up to 48 months depending on case law and factors such as the duration of the relationship, the scale of investments, and the distributor’s economic dependence.
A prior assessment of the benefits of concluding a written distribution agreement, along with anticipation of termination conditions, can help mitigate financial risks.
The Franchise Agreement: Strict Regulation and Contractual Vigilance
Franchising is characterized by the transfer of know-how, assistance, and brand identity.
In Belgium, it is subject to strict rules, particularly during the pre-contractual phase. Non-compliance with these obligations may result in the contract being declared null and void, or in damages being awarded.
Certain clauses, especially those relating to non-compete or exclusivity, must be carefully drafted. The end of the contract also requires close attention, particularly regarding notice procedures, potential compensation, or the transfer of the business.
Securing the relationship therefore requires comprehensive documentation and in-depth legal analysis prior to signing the agreement.
Conclusion: Preventing Risks through Law and Strategy
Commercial agency, exclusive distribution, and franchise agreements are three cornerstones of commercial distribution law in Belgium.
They share a common feature: they protect the distributor or agent while exposing the supplier or principal to significant financial risks if the termination is poorly managed.
Prevention relies on a dual approach: theoretical mastery of legal and case law rules, combined with a practical strategy for negotiation and dispute management.
-Justine Vaesen, Attorney - Senior Associate Claeys & Engels
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