In the modern market there are various dealers: official, exclusive and others. The functions they perform are sometimes so varied that it is difficult to determine what dealership is. By definition, the dealer is a legal entity (individual) that performs intermediary functions in the implementation of sales transactions. In this case, a dealer agreement is concluded, and the person himself acts on his own behalf.
Thus, the dealer acts as an intermediary between the manufacturer and the buyer in wholesale. His actions are performed on the basis of concluded agreements, which provide for the transfer of ownership of the products from the supplier to the dealer, and then to the buyer. At its core, a dealership agreement has a sale or exchange agreement. In fact, the dealer is a simple intermediary, reseller of goods. However, today there are many companies on the market that call themselves dealers, but in fact are attorneys or commission agents in actual relations.
The classic dealer from the definition of the western economy is the initial link in the intermediary chain and finds its place in direct relations with the manufacturer (supplier). A dealership agreement is an agreement that is concluded between a dealer and a manufacturer, and their duties and rights are defined in it. And yet, the relations of the parties are not limited to simply supplying products. As world experience shows, certain principles and differences between classic dealerships and ordinary wholesale trade have been developed. In addition to the obligations of the payer and the buyer, the dealer has additional obligations to the manufacturer and has certain rights.
Firstly, these are special dealer discounts. Since the dealer is an exclusive buyer, goods are sold to him at the lowest possible price. This condition is indicated by the dealer agreement. Due to the fact that the dealer usually buys large wholesale lots of goods, the manufacturer, with actual low profitability, receives additional income due to high speed
The second condition of the dealership is the representation of trade interests and the sale of producer products among a certain circle of consumers in a certain territory. Most often these are exclusive rights that allow you to build your business, knowing that no one will sell this product among a certain circle of customers or in a given territory.
Having concluded a dealer agreement, a sample of which is prepared by the manufacturer, the regional representative gets the right to use the trademark and be called the official dealer of the supplier’s company, in addition, it is possible to choose a certain type of product according to consumer properties, quality and other parameters.
However, in addition to rights, the dealer has a large number of responsibilities that are specific to these relationships.
There is an obligation to purchase a set amount of goods with a certain frequency. And if a smaller volume is acquired in one period, the difference is transferred to the next period, and the dealer is obliged to sell it. Also, the representative must observe the territory on which the sale will be carried out. The purpose of the dealership is to expand the market and its reasonable legal monopolization. Typically, a dealership agreement covers a territory that coincides with an administrative division.
It is the responsibility of the dealer to carry out promotions and companies, the costs of which the manufacturer does not compensate. Also, the representative must provide after-sales service and trade only the product of one manufacturer.