The investor’s field guide · D
Distributor
A business that buys goods or services from a supplier and resells them in its own name and at its own risk, rather than acting as the supplier’s agent.
Explained by the editorial team
A distributor purchases from a supplier and resells to its own customers for its own margin. It takes title to the goods, bears the risk of unsold stock, and acts in its own name rather than the supplier’s. This is the main thing that separates a distributor from a commercial agent, who negotiates or concludes sales in the supplier’s name without ever owning the goods.
How it works
Because a distributor is not acting as the supplier’s agent, it generally falls outside agency-specific rules such as the UK and EU’s commercial agent termination rights. Ending a distribution agreement is usually governed only by the contract itself, not by a separate statutory entitlement to compensation, though the position differs by country and a distribution agreement that functions like an agency in substance can sometimes be treated as one regardless of its label.
What to examine
Check whether the arrangement actually works as a distributorship in practice, who holds the resale risk, who sets the final price, and who the end customer's contract is with, since a mislabelled relationship can shift which rules apply. Confirm termination notice periods, territorial exclusivity and stock buy-back terms in the contract itself, and get local advice before assuming the same protections apply in every country.
General information, not investment, legal or tax advice. Examples are illustrative. Read the disclaimer.