Are you considering selling your current products on a new market? Then your business may want to consider a commercial agent or another intermediary as your sales channel. If your business is small, it may also be advantageous to have an agency agreement. It can be highly resource-intensive to create growth in your company through market development. This is because this form of change often places great demands on the company’s internal resources. Therefore, it may be a good idea to agree with a local commercial agent or other intermediary. These people often already have a solid knowledge of the desired market and the market’s customers.
What is a commercial agent?
A commercial agent is someone who acts in the name of a principal and at said principal’s expense, usually with the purpose of marketing the products in a certain territory and thus generating sales.
What are some of the other types of intermediaries?
There are several different types of intermediaries in addition to the classic commercial agent. For example, you may meet a commission agent or a dealer who acts on his own behalf and also at his own expense.
What is an principal?
In an agency agreement, there are two parties – a commercial agent and a principal. The principal is the person or legal entity who engages the commercial agent. For example, it could be a manufacturing company or another company that wants help selling their products.
Advantages and disadvantages of using an agency agreement
When using a commercial agent, there are both advantages and disadvantages.
The advantages of an agency agreement can be, for example, that it is typically a quick and cheap way to enter the desired market. However, there are also disadvantages associated with such agreements, e.g. the selling costs become variable. In agent agreements, commissions are paid to the agent when he or she has completed a sale.
In addition to the two factors mentioned, you should also be aware that the rules for an agency relationship are subject to the Danish regulations, which are harmonized with EU rules. However, there may be different nuances of EU rules in the other member states, and therefore an agency agreement may be interpreted differently abroad. It is, thus, a good idea to have your agency agreement reviewed by a lawyer.
Advice from skilled lawyers
At Advokatgruppen, we have a large team of skilled lawyers who are ready to help you with a review of your commercial agency agreement. We can assure you that there are no ambiguities or anything else that could cause unnecessary disputes in your agency relationship. You can find us at one of our three offices in Horsens, Fredericia and Aarhus. Even though we are located in East Jutland, we advise throughout Denmark. You are always welcome to contact us for a non-binding and free initial call.