Frequently Asked Questions

How does the Territory and Channels of Distribution Clause affect where and how merchandise can be sold?

The Territory and Channels of Distribution Clause in a merchandise license contract plays a crucial role in determining where and how the licensed merchandise can be sold. This clause specifies the geographic regions or territories in which the merchandise may be sold. It is generally advised that the licensor limit the territory to the countries where the licensee maintains a presence. This ensures that the merchandise is sold in markets that are familiar and accessible to the licensee, thereby increasing the chances of successful sales and reducing potential legal complications. In addition to defining the territories, this clause also outlines the channels through which the merchandise can be sold. These channels could be specific stores, types of stores, or even online platforms. By limiting the channels of distribution, the licensor can control the market exposure of the merchandise and ensure that it is sold in a manner that aligns with their brand image and business strategy.