A distribution contract is a commercial contract between a supplier of goods and a distributor of goods. The supplier may be a manufacturer or reseller of the products. There is a territorial clause where rights are granted in the world. This could go hand in hand with the exclusivity above; for example, there could be an exclusive license in the United States, but in the rest of the world it could not be done exclusively. This would allow the developer to enter into contracts with other publishers outside the United States. It is important to ensure that, when signing several sales or publication contracts, the rights do not overlap so that either distributor becomes an infringer. As a general rule, the agreement contains a guarantee clause stating that the rights granted can indeed be granted. Clauses like this will be discussed next week in the second segment of this series. The reporting requirement should also be defined in the agreement. What exactly does the manufacturer ask distributors and how many times do they have to be submitted? Does the distributor have to draw up and submit a written sales plan or will the manufacturer do so? Some state franchise laws say that if the distributor is responsible for developing the marketing plan, the franchise law does not apply – the theory is that the franchise law only applies if the manufacturer prepares the plan and requires the distributor or franchisee to follow it. Therefore, from the manufacturer`s point of view, it may be good, at least in these countries, for the distributor to take responsibility for developing a marketing plan.
The starting point is that international distribution agreements generally contain details on specific products and the specific area that will be included in the contract. As indicated by the Internal Revenue Service (IRS), Form 5472 should be used to provide the information required under Section 6038A and Section 6038C, where reporting transactions take place during the relevant fiscal year of a reporting company with a related foreign party or a foreign company operating in a U.S. business or business. Needless to say, the IRS`s official statement of this form is not very clear. Form IRS 5472 is a challenge to complete and file and, if not executed properly, it could cause serious problems. In this article, I explain what IRS Form 5472 is, why you need to submit it and how to complete it.