This was originally posted in 2013 under Expertexporter’s wordpress blog.
Working with an overseas agent can be a good route to market for companies new to exporting. Exporters get access to the agent’s contacts in the overseas market but are still in control of the operation of their business in the overseas market.
Appointing an agent is an important business decision. I would recommend that at least one face-to-face meeting takes place to discuss the following matters before any agreement is signed.
1. Does the agent have proven experience in the market?
2. Can they provide references from other UK/EU principals?
3. How established is the agent in the market?
4. Is the agent well located i.e. in a large city with good access to other areas with reasonable populations?
5. Can the agent provide the market coverage your organisation requires? Check they cover all of the territory and not just one area.
6. Does your product fit with their current product lines? It should be complementary rather than competitive to avoid conflicts of interest.
7. Is the sales team motivated? How up to date is their training? Are they well managed and incentivised? What regions do they cover?
8. What connections does the agent have and are they the right ones for your product?
9. Is the agent able to provide good, up-to date market research relevant to your product?
10. What are their long term goals and do they match yours?
Although much of the following will be covered by the agency agreement, it is probably best to include the following points in your initial discussions:
a. Commission – how this will be calculated and when and how this will be paid
b. Allocation of costs – agent’s office costs, administration, promotions etc.
c. Law governing any agreement and the jurisdiction
d. Targets for the first few years
e. Exclusive or non-exclusive arrangement
Finally, the law of agency differs from country to country, so it is worthwhile investigating the law as it applies in the country of your potential agent.