3.2.1 Formation Requirements (i)
D raft a Sales Agency Agreement outlining commission structure, exclusivity terms, and termination clauses. (ii) E nsure compliance with Federal Trade Commission (FTC) regulations regarding fair trade practices. (iii) V erify state-specific sales and business licensing requirements for independent agents.
3.2.2 Advantages (i)
Lower upfront costs compared to establishing a branch or subsidiary.
(ii) R educes administrative and tax burdens since the agent is responsible for its own tax filings.
3.2.3 Disadvantages (i)
Less control over pricing, branding, and customer relationships.
(ii) Success depends on the agent’s commitment and market expertise.
(iii) C ontractual agreements must clearly define exclusivity, commission structures, and performance expectations.
3.3 Distributor Agreements A distributor purchases products from the foreign company and resells them in the U.S. market, often handling marketing, warehousing, and customer service.
3.3.1 Formation Requirements (i)
N egotiate and execute a Distributor Agreement specifying pricing, territorial rights, and branding terms. (ii) E nsure compliance with Uniform Commercial Code (UCC) regulations governing commercial sales in the U.S. (iii) A ssess potential antitrust laws to avoid exclusivity clauses that may violate competition laws.
3.3.2 Advantages (i)
Provides rapid access to established distribution networks.
(ii) R educes regulatory, tax, and operational responsibilities for the foreign company.
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