The basic difference
| Sales agent | Distributor | |
|---|---|---|
| Buys the goods? | No | Yes, on its own account |
| Contract with the end buyer | Signed by you (the principal) | Signed by the distributor |
| Who invoices the buyer and receives payment | You | The distributor |
| Earns | Commission on orders, sometimes plus a fee | The margin between its purchase and resale price |
| Resale price | Set by you | Set by the distributor (you can recommend, not impose) |
| Stock and credit risk | With you | With the distributor |
| Customer relationship | Your customer; you see every order | The distributor’s customer; you may not know the end buyers |
| Typical in | Industrial goods, components, private label, projects, B2B with few large buyers | Consumer goods, products needing local stock and service |
The EU Commercial Agents Directive
Relations between a principal and a self-employed commercial agent in the EU are shaped by Council Directive 86/653/EEC, which each EU country has implemented in national law (in Poland in the Civil Code). Some points matter for factories:
- The agent is entitled to commission on transactions concluded as a result of its work, and in some cases on repeat orders from customers it brought.
- Minimum notice periods apply when the contract ends, depending on how long it has run.
- On termination, the agent may be entitled to an indemnity or compensation, for example if it brought new customers from whom the principal continues to benefit. Under Article 17 the indemnity may not exceed one year’s remuneration, calculated from the agent’s average annual remuneration over the previous five years. The agent must claim it within one year after the contract ends.
- Many of these rules cannot be excluded to the agent’s disadvantage by contract.
The directive applies to agents who negotiate sales of goods. Service companies with a different contract structure may fall under other rules. Ask a lawyer in the chosen jurisdiction to check your contract.
Distribution and exclusivity under EU competition law
Distribution contracts in the EU must respect competition law. The Vertical Block Exemption Regulation (EU) 2022/720 sets out what is generally allowed when neither the supplier’s nor the buyer’s market share exceeds 30%:
- You can appoint an exclusive distributor for a territory or customer group and restrict other distributors from actively selling into it. Since 2022 such an exclusive territory can be shared by up to five distributors.
- You generally cannot fix the distributor’s resale price or minimum price (recommended prices are allowed).
- You generally cannot stop a distributor from responding to unsolicited orders from customers in other EU countries (passive sales).
So “European exclusive distributor” in practice means exclusive rights to actively sell, not a complete ban on other sales channels. Check the details with a lawyer before signing.
Who owns the customer?
This is the question factories ask most. With an agent, the contract with the buyer is in your name, the buyer pays you and the customer is yours. The risk is the reverse: the agent fears that you will cut it out after the first order. A fair contract solves this with a list of registered customers and commission on their repeat orders for a fixed period.
With a distributor, the distributor owns its customer relationships. If you end the contract you may lose access to those buyers, and sometimes you must buy back stock. Ask for regular sales reports by customer type or region if you want market information.
Exclusive agent or exclusive distributor: when does it make sense?
- Give exclusivity when the partner invests: a dedicated person, stock, marketing, trade fairs, listings with chains.
- Tie it to targets: minimum orders or sales per year, with the right to end exclusivity or reduce the territory if they are not met.
- Limit it: one or a few countries, named product lines, a fixed first term (for example 12–24 months).
- Avoid “all of Europe” for a new partner without a track record.
Contract checklist
- Parties and governing law; language of the contract (with a translation for reference)
- Products and territory; exclusive or not
- For an agent: commission rate, basis (paid orders, excluding VAT and shipping), when it is due, which customers count
- Registered customers and the period during which repeat orders count
- For a distributor: purchase prices, minimum orders, payment and delivery terms, stock at the end of the contract
- Targets and what happens if they are not met
- Use of your brand, trademarks and marketing materials
- Who is the importer and GPSR responsible operator; who handles complaints, warranty and recalls
- Reporting: frequency, content, CRM access
- Term, notice, termination and any indemnity
- Non-compete and confidentiality
What an outsourced sales contract looks like
Between an agent and a distributor there is a third model: an outsourced sales service. A company in Europe acts like your sales department — research, offers, calls, meetings, samples, negotiation — for a monthly fee plus commission. Contracts with buyers are still signed in your name. What to check in such a contract:
- What exactly the monthly fee covers, in hours, countries and products
- How commission is calculated and on which orders
- How introduced buyers are registered and for how long they count
- What reports you receive, and whether you see every contact
- Whether the provider represents competing factories in your category
- How either side can end the contract
Our guide how export sales services charge compares fee models.
How to choose
- If your buyers want local stock, local invoices and service: start with a distributor (or a partner that imports).
- If your buyers are few and large, and buy directly from factories: an agent or outsourced sales team.
- If you want to keep pricing and customer relationships: an agent model.
- If you want to avoid credit risk and logistics in Europe: a distributor model.
Common mistakes in agency and distribution contracts
- A one-page contract without territory, products, commission basis or termination rules.
- Exclusivity without minimum volumes or a time limit.
- No definition of which customers count for commission, which leads to disputes later.
- Choosing a governing law and court without knowing what that law says about agent indemnity.
- No rule on stock, brand use and customer lists after the contract ends.
- Forgetting the compliance roles: nobody is named as importer or GPSR responsible operator.
A good contract protects both sides. A partner who knows its work will be paid fairly — including on repeat orders — has a reason to introduce its best customers to you instead of hiding them.
Mixed models
Many factories use both models at once: a distributor for one country where local stock and service matter, and an agent or outsourced sales team for large buyers who import directly. This works if the contracts say clearly which customers or channels belong to whom, and if prices to the distributor and to direct buyers are consistent enough that the distributor is not undercut in its own market.
How we can help
We work in both models. In the agency model we find and qualify buyers, contracts are signed in your name, every introduced buyer is registered in a shared CRM and commission applies to their orders for an agreed period, usually 24 months. In the distribution model our EU company buys and resells your goods under a distribution agreement. See sales representation, distributor search and FAQ.
