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Scale, fund & exit

What terms should I negotiate with a distributor (margins, credit, exclusivity)?

Nail down distributor margin (typically layered on top of retailer margin, so know your full trade margin stack before you agree to anything), credit period and payment terms (general trade often runs on cash or short credit, protect your working capital), and be very cautious about exclusivity - a regional exclusive can make sense for a serious, well-capitalised distributor but locks you out of alternatives if they underperform. Put minimum order quantities and a review/exit clause in writing from day one; a handshake distribution deal is one of the most common regrets founders report a year in.

Go deeper

3 resources, 3 India-specific, 3 link-checked.

📄 Article
✓ Link checked India Free Beginner

A step-by-step, brand-facing guide to actually sourcing distributors in India, rather than a theoretical overview - closest to a checklist you can follow this week.

How to Find Distributors in India - The Complete Step-by-Step Guide for Manufacturers and Brands

From indiadistributor.in by IndiaDistributor

  • Covers market visits, referrals, trade shows and B2B platforms as sourcing channels.
  • Emphasises vetting on financial stability, expertise and genuine market reach.
  • Warns against defaulting to the largest available distributor over the best regional fit.
Open indiadistributor.in →
📄 Article
✓ Link checked India Free Intermediate

Focuses on the vetting criteria - financial stability, industry expertise, market reach - that founders skip in the excitement of finally landing a distributor, and pay for a year later.

Distributor Partner Search in India for Business Growth

From imarcengineering.com by IMARC Engineering

  • Financial stability and reputation should be checked before signing any distributor.
  • Niche, regionally-focused distributors often outperform large generalist ones.
  • Distributor selection should be treated as a formal vetting process, not a handshake decision.
Open imarcengineering.com →
📄 Article
✓ Link checked India Free Intermediate

A government trade-commission guide to how India's distribution system is actually structured - the three-tier distributor/wholesaler/retailer model - written for outsiders entering the market, which makes it unusually clear and structural.

India - Distribution and Sales Channels

From trade.gov by International Trade Administration (US Dept of Commerce)

  • India typically runs a three-tier distribution structure: distributor, wholesaler, retailer.
  • Large FMCG players can run 40-80 distributors across the country.
  • Useful structural map before you negotiate any single distributor relationship.
Open trade.gov →

Terms in this answer

Working Capital

People also ask

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