FREE online courses on Franchising Business and You - Franchising Distinguished - Dealerships and Distributorships

 

These arrangements are usually established by a manufacturer or supplier of products. Independent dealers agree to carry the products and sometimes agree to engage in promoting and servicing of the products. A “pure” dealership or distributorship differs from a franchise in that no separate fee is charged to a dealer or distributor for the right to enter into or continue in a distribution relationship. Rather, the supplier sells products at bona fide wholesale prices and it makes its income that way. Distributorships and dealerships may be exclusive or nonexclusive. Some companies may be dealers or distributors for many products; others will represent a single manufacturer or supplier. The supplier may or may not provide a system of doing business for dealers or distributors.