Distribution Agreement in Korea: Factors to Always Keep in Mind

Prior to going into any relationship with a distributor/agent in Korea, please read my post entitled: Finding a Korean Distributor: The Top 10 Things to Know Before Going to Bed with a Distributor in Korea. Please read that post in combination with this post, prior to engaging a distributor.

We see too many distribution agreements that are mere spun U.S. distribution or agent agreements. Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea. We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence.

Issues to consider for your Korean Distribution Agreement:

  1. Will your distributor in Korea be your agent? If the distributor is an agent, generally, you will, only, be paying your agent a commission and you will be directly invoicing the client. Liability and other issues to consider.
  2. Will your Korean distributor be your exclusive distributor? How long will the relationship last? How can the relationship be terminated? Territory? Scope?
  3. What occurs after termination of the relationship with the Korean distributor? Return of products, buy back inventor etc.?
  4. Dispute resolution mechanisms? Venue? Arbitration?
  5. Have you created a franchise? If so, we have some more talking to do. The requirements for franchising in Korea is much more cumbersome than a mere distribution relationship.
  6. Have you registered your trademarks? Korea is a first-to-file nation. If you have an agreement with a distributor – you may be protected even without registering your trademarks – however- register and avoid issues with others.
  7. Did you conduct a thorough due diligence on the distributor?
  8. Who handles warranty claims, distribution, support, marketing etc.?
  9. Is the party signing the agreement authorized to sign the agreement? Make sure the agreement is properly executed.

We see too many distribution agreements that are mere spun U.S. agreements. Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea. We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence.

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