Fabio Bortolotti
Contracts whereby a supplier is granted
an area within a department store,
shopping mall or other similar
organization.
A general overview
2012 IDI Conference - Venice
Agreements which grant the supplier an
exclusive area within a retail organization
(“distributor”)
The distributor can be:
•a department store
•a shopping mall/commercial center
•a factory outlet center
•an airport
The area granted may be:
•a section of the store
•an individual shop
•a space within the store: corner/espace démonstration
Various terms used in practice
-
Concession agreement
-
Corner
-
Shop-in-shop
-
Agreement for the management of a department
(“affidamento in gestione di reparto”)
-
Contrat de démonstration
-
Contrat de vente à condition/Consignment agreement
The area granted to the supplier
“commercial” issues
- Where? Near to which competitors?
- Right of the distributor to change location?
- Is the supplier free to decide the fit-out (design,
decoration)?
- Who carries out and/or pays the fit-out?
- Maintenance and upgrading
The area granted to the supplier
“legal” issues
- Lease of the area or lease of a business activity?
- How to avoid rules on commercial lease
contracts or how to comply if avoiding them is
impossible?
- Possible administrative constraints on supplier:
need for a license for retail sales.
The consideration for the use of
the area
- Annual/monthly fee?
- Percentage calculated on turnover?
- Paid annually/monthly
- Deducted by the distributor from sums cashed
- Fixed fee + percentage
- Minimum guaranteed amount + percentage
Who manages the area
• The Supplier sells with his own personnel through his own
cash registers.
• The Supplier sells with his own personnel through the
distributor’s cash registers.
• The Supplier uses his own personnel for offering the
products, but these are sold by the distributor through its
cash registers.
• The products are sold by the personnel of the distributor.
• Parties may agree that employees of the distributor
must follow indications/training by the supplier.
Issues regarding the supplier’s
personnel
• Exclusive responsibility of the supplier for his
personnel.
• Obligation to comply with al rules of the store.
• Full coverage of opening hours.
• Labour law problems: risk that supplier’s
employees pretend to be employees of the
distributor.
• Problems arising when the supplier does not
have a subsidiary in the distributor’s country.
Passing of the products from the supplier
to consumer
• The supplier sells directly to the consumer (through his
own cash registers or through those of the distributor).
• The supplier puts the goods at the distributor’s disposal
on a consignment basis and the distributor sells them to
the consumer. Two alternative solutions:
• Conditional sale: goods are sold to the distributor when
the distributor (re)sells them to the consumer.
• Distributor acting as commission agent: the distributor
sells the goods of the supplier in his own name but on
behalf of the supplier.
• The distributor purchases the goods and resells them (with
or without right to return unsold goods).
Determining the price to consumers
Possible antitrust problems
• The supplier sells in his own name:
 no problem.
• The distributor resells the goods:
 prohibition
of
resale
price
maintenance.
• The distributor sells in his own name but on behalf of the
supplier:
 price fixing admissible, provided he is to be qualified as
“true”
agent
(in
case
of
EU
antitrust).
Term and termination
• Long term contracts (one to five years).
• Contracts for an undetermined period
with right to terminate observing a period
of notice.
• Right to early termination in case of
breach.
Thank you for your kind attention!