Legal Definitions - dual distributorship

A dual distributorship refers to a business arrangement where a manufacturer or supplier sells its products or services directly to end-users or customers, while simultaneously also selling those same products or services through a network of independent distributors, resellers, or retailers.

In essence, the supplier operates in two roles: as a wholesaler to its distributors and as a direct competitor to those same distributors in the marketplace. This structure can sometimes lead to complex legal considerations, particularly concerning competition and contractual agreements.

• Example 1: High-End Furniture Manufacturer

  Imagine a company that designs and manufactures luxury furniture. This company sells its furniture directly to consumers through its own branded showrooms in major cities and via its official e-commerce website. At the same time, it also partners with independent interior design firms and high-end furniture retailers across the country, allowing them to purchase and resell the furniture to their own clients. This arrangement constitutes a dual distributorship because the manufacturer is both a direct seller to the public and a supplier to independent businesses that also sell its products.

• Example 2: Specialized Industrial Equipment Provider

  Consider a company that produces highly specialized industrial machinery used in manufacturing plants. This company has its own direct sales force that calls on large corporate clients and government agencies to sell and service the equipment. Concurrently, it also appoints independent regional distributors who are responsible for selling the same machinery to smaller businesses and providing local support within their assigned territories. Here, the equipment provider engages in a dual distributorship by serving customers directly while also relying on independent distributors to reach other segments of the market.

• Example 3: Cloud Software Vendor

  A company develops and offers a popular cloud-based project management software. Customers can subscribe to this software directly through the company's website, accessing various plans and features. However, the company also has a partner program where independent IT consulting firms and value-added resellers (VARs) can license the software, bundle it with their own services (like implementation, training, and custom integrations), and then sell these comprehensive solutions to their clients. This scenario illustrates a dual distributorship because the software vendor sells directly to end-users while also enabling partners to resell and integrate its product.