Distribution agreement free essay sample

Shed some light Raynonplus is a small, family-owned eyewear business located in Ottawa, Ontario, Canada. Started by Pierre Dupuis in 1952 under the name of Visionplus, the company has been exclusively owned and operated by the Dupuis family for over 50 years. Currently, the business—a sole proprietorship—is owned and managed by Gerald Dupuis, grandson of the original entrepreneur. The Dupuis’ changed the business name in 1957 to capitalize on a trend in polarized sunglasses that swept the neighbouring French speaking province of Quebec. Traditionally, Raynonplus sold a wide range of generic and brand name eyewear including prescription lenses, contact lenses, frames and sunglasses; but no proprietary goods. After Gerard took over the business in 2004, he and his fashion designer wife Dominique introduced their own brand of sunglasses under the trademarked name of Ray à   Porter. Initially, the brand was marketed as an alternative to lower end or generic prescription sunglasses. The demand for these sunglasses, fueled by the bold and unconventional styles and materials used by Dominique in her original designs, soon elevated the Ray à   Porter brand into designer label market status. Customers from Quebec made up a large part of the target audience, accounting for 35 percent of sales. I wear my sunglasses†¦ in France One of Ray à   Porter’s biggest customers is Quebec pop sensation Zoà ©, an international superstar in the French speaking world. In addition to wearing them in her everyday life, Zoà © incorporated custom designed Ray à   Porter sunglasses as part of the wardrobe for her European concert tour. The unsolicited celebrity endorsement sparked a frenzy of demand for the sunglasses in France. Keep your vision in focus Having been a relatively small family owned business selling goods exclusively in Canada for half of a century, Gerald Dupuis now had to decide his best market strategy for his new found international success. Taking a cautiously optimistic approach to their new opportunity, Gerald and Dominique decided to keep the manufacturing of Ray à   Porter’s sunglasses in-house initially by contracting to local artists and art schools to meet demand. Determining the optimum way to sustain the market momentum as well as to effectively and efficiently distribute the goods in France was the biggest dilemma for Raynonplus. Gerald was not convinced the success was more than a trend and wanted to preserve the business as a family operation for as long as possible. As such, he was reluctant to relinquish operational control or jeopardize the existing business success in Canada. After careful research and consultation with specialized trade lawyers and experts in international marketing, Gerald narrowed his choices to either contracting with an international sales agent or a finding a distributor in France. He chose a small, established upscale chain of family operated accessory stores named Le Seul Choix (translates to ‘the only choice†) as a distributor. Ray à   Porter continues to sell well in France, accounting for 20 percent of all the overall sales for the Raynonplus proprietary brand. Case Study Discussion Questions 1. What are some of the benefits that would have compelled Raynonplus to choose distributorship agreement over an international sales agent agreement? 2. List another possible form of international business endeavor Raynonplus could have considered as a market strategy in France. Given the details of this particular business case, would this option not have been right for Gerald? 3. When negotiating the distribution agreement, the parties determining applicable law for the distribution agreement, what are some of the options Raynonplus and Le Seule Choix have chosen to govern the distribution agreement? 4. With regards to IP, what measures will Gerald need to take in order to protect Ray à   Porter from losing financial compensation and creative control of its brand? Case Study Questions – Key Response Points 1. What are some of the benefits that would have compelled Raynonplus to choose a distributorship agreement over an international sales agent agreement? .. Sales agents tend to be used for more highly specialized goods that require implementation, installation or aftermarket services. .. A distributorship agreement, or the terms governing the business relationship between the principal and the foreign distributor, often ensure an extensive portion of the financial costs are absorbed by the distributor, whereas there is no such risk to a sales agent. For example, distributors often purchase the merchandise outright and are compensated through price mark-ups and predetermined credit and payment policies as opposed to sales agents who do not purchase the merchandise and work on commission based compensation. 2. List another possible form of international business endeavor Raynonplus could have considered as a market strategy in France. Given the details of this particular business case, why would this option not have been right for Gerald? .. Additional possibilities for international business include: .. FDI .. Joint venture .. Partnership .. For the most part these options require a sharing of both financial and operational responsibilities. For example, in many countries, national FDI legislation requires 51 percent national ownership. These are therefore not viable options for Gerald who wishes to maintain control over a family business. 3. When determining applicable law for the distribution agreement, what are some of the options Raynonplus and Le Seule Choix have chosen to govern the distribution agreement? If no governing law is chosen or specifically excluded, what will govern the contract in the event of a dispute? .. CISG, Sale of Goods Act, Ontario, UNIDROIT Principles of International Commercial Contracts, EU Directive Governing the Sale of Goods .. Because both Canada and France are signatory members of the CISG, it will be the instrument used to determine the outcome of disputed issues where governing law has not been specified. 4. With regards to IP, what are some measures Gerald can take in order to protect Ray à   Porter from losing financial compensation and creative control of its brand? .. The Ray à   Porter trademark should be registered in the EU. .. A domain name should be registered. .. If possible, any aesthetic distinctions of Ray à   Porter designs should be registered for industrial design protection .. An IP clause should be included in the agreement, outlining the rights and obligations of the distributor with regards to using the Ray à   Porter name and logo in marketing, advertising and distribution.