Distribution Agreements in Bangladesh — The 2025 Field Guide for Founders, COOs & GCs by TRW Law Firm

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Featured snippet (quick answer)

A distribution agreement sets how a supplier authorizes a distributor to buy and resell products in a defined territory, through specified channels, under agreed brand, quality, pricing communication, compliance, and after-sales standards. In Bangladesh, your drafting must sit on the Contract Act, 1872 (formation, remedies), respect competition law (avoid resale price maintenance and other anti-competitive restraints), and keep consumers’ rights in view. The levers that decide outcomes are exclusivity & performance targets, price/tax/FX mechanics, quality & recall, IP/brand use, data & audit rights, termination & transition, and a smart disputes plan (arbitration + court interim relief). (Bangladesh Laws)

Why this guide — and why TRW

TRW Law Firm is Bangladesh’s largest cross-border law firm, trusted by global brands, listed companies, DFIs and high-growth scale-ups to build distribution, selective distribution and franchise networks across Bangladesh, the GCC, the UK and the EU. With integrated Dhaka–Dubai–London–U.S. teams, we convert commercial objectives into bankable, compliant contracts that hold up with auditors, customs, regulators, platforms—and courts.

1) Distribution vs. agency vs. reseller — choose the right chassis

• Distributor (buy-sell): Distributor purchases goods, takes title and inventory risk, resells at its own price (subject to competition-law hygiene), and provides local logistics/after-sales. Typical for FMCG, electronics, auto parts, pharma wholesale (subject to sector rules).
• Commercial agent (principal sells): Agent solicits orders; principal invoices the end customer; agent earns commission. Useful where pricing, credit and brand need tight central control.
• Value-added reseller (VAR): Hybrid used in tech—reseller adds services (installation, customization, support).
• Franchise: Brand + format replication with deeper brand standards, training and royalties—use when you need format control, not just channel access.

TRW tip: Your unit economics + control needs pick the model. If you need sell-out data, service standards and brand policing, a pure “buy-sell and hope” distributor is rarely enough—build selective-distribution or franchise-lite obligations into the contract.

2) The legal backbone (Bangladesh)

• Contract Act, 1872 governs formation (offer, acceptance, consideration), capacity, consent, and remedies. Your agreement’s enforceability and damages logic live here. (Bangladesh Laws)
• Competition Act, 2012 polices anti-competitive agreements and abuse of dominance. Avoid hard-core restraints like resale price maintenance (fixing downstream resale prices) and cartel-type coordination. Calibrate exclusivity, MFNs, non-competes, and market partitioning with care. (Bangladesh Laws)
• Consumers’ Right Protection Act, 2009 shapes after-sales/service, labeling, warranty and recall behavior. Your distributor’s consumer-facing conduct can create legal and reputational exposure for the brand. (Bangladesh Laws)

3) Anatomy of a high-performing distribution agreement

3.1 Scope, territory & channels

• Territory: Define countries/regions precisely. For Bangladesh, decide if e-commerce and marketplaces (Daraz, Facebook shops) are inside scope or carved out for the principal.
• Exclusivity: Exclusive, sole (exclusive against principal but not other distributors), or non-exclusive. Tie exclusivity to objective performance (minimum purchases, coverage, service KPIs).
• Channel controls: Retail, wholesale, B2B, government, hospital/clinic, marketplace, cross-border “.com”—each may require different compliance and approvals.

3.2 Term, renewal & ramp

• Initial term (2–3 years) with automatic renewal only if performance thresholds and compliance are met.
• Ramp schedule: Quarterly/annual minimums, with cure periods and right-size mechanisms if macro events hit.

3.3 Price, taxes & payment

• Price lists & updates: Principal may recommend prices (RRP/MAP communications) but avoid resale price maintenance—use non-binding guidance and promotional funding instead.
• Taxes: Clarify VAT treatment, withholding tax on services/marketing support, and customs duty allocation; build landed-cost models into deals.
• FX & payment terms: Currency, settlement windows, interest on late payment, security (LCs, guarantees), and Bangladesh Bank export-proceeds clocks on the principal’s side.

3.4 Orders, supply & delivery

• Forecasting & MOQ: Rolling forecasts (non-binding beyond near months), minimum order quantities, and allocation rules during shortages.
• Incoterms® + risk of loss: Match your trade terms (FOB/CIF/DAP) to insurance and VAT/customs logic.
• Recall/withdrawals: Pre-baked protocols with data and cost allocation.

3.5 Quality, brand & marketing

• Specifications & QC: Conformance to spec; inspection before and after import; storage standards; temperature/humidity controls if relevant.
• Brand use: Tight brand-manual obligations; pre-approval for campaigns; UGC moderation; platform storefront standards.
• Claims & advertising: Evidence-based claims only; health/medical marketing must pass regulatory review.

3.6 IP & data

• IP ownership and licensed marks; clear boundaries on marketing materials.
• Data: Sell-out, inventory, returns, warranty claims—format, cadence, and audit rights. Data fuels replenishment and anti-grey-market enforcement.

3.7 Compliance (make it operational)

• Competition law: No RPM, bid-rigging, or market allocation. Training + dawn-raid protocols. (Bangladesh Laws)
• Consumer protection: Warranty handling, spare parts availability, complaint response SLAs, and refunds where required. (Bangladesh Laws)
• Trade/sanctions: No restricted-party sales; export-control compliance for dual-use items.
• Anti-bribery/AML: Policies, training, audit rights; termination for violations.

3.8 Warranties, indemnities & liability caps

• Product warranty terms mirrored to consumer-facing commitments; DOA/RTV processes.
• Indemnities: Third-party IP claims, product liability, regulatory fines (as negotiated); procedures for defense, notice, and settlement.
• Liability caps: Aggregate caps (e.g., 12–24 months’ purchases) with carve-outs for fraud, willful misconduct, and IP infringement.

3.9 Termination & transition

• For cause: Material breach, insolvency, sanctions breach, repeated non-performance.
• For convenience: Optional with notice and buy-back of resalable inventory; plan a sell-off period.
• Handover: Customer lists, warranty records, tooling, POS materials, and domain/storefront control; non-solicit of staff for a defined time.

4) Competition-law hygiene: keep growth, ditch the risk

Don’ts (high-risk):

• Resale price maintenance (fixing minimum resale price).
• Market partitioning between distributors.
• Collusive promotions or bid-rigging.
• Hard exclusivity with foreclosure effects where you hold significant market power.

Do’s (safer levers):

• RRPs/MAP guidance as non-binding information.
• Selective distribution criteria (quality, service, brand presentation)—applied transparently.
• Performance-based exclusivity (objectively measured).
• Objective channel rules (e.g., storage conditions, warranty handling, trained staff).

Your contract should codify compliance: annual training, policy annexes, audit rights, and a self-reporting window for suspected violations. (Bangladesh’s Competition Act is principles-based—behavior that restricts, prevents or lessens competition can attract scrutiny.) (Bangladesh Laws)

5) Grey market & parallel trade — how to fight it legally

• Serials & serialization: SKU-level codes tied to distributor invoices; block-list serials from unauthorized sources at service centers.
• Selective distribution + platform controls: Require approved storefronts, imagery and service levels; reserve right to take down non-compliant listings.
• Territory-cleanse clauses: No active sales into another distributor’s territory; passive sales treated carefully to avoid de-facto market partitioning.
• Customs & brand: Record trademarks with customs where available; use cease-and-desist plus take-downs for counterfeit or unauthorized listings.

6) E-commerce playbook (Bangladesh + cross-border)

• Marketplace carve-outs: Principal may own official stores on marketplaces; distributor handles offline + designated online channels.
• MAP vs. RPM: Communicate minimum advertised price (MAP) for brand hygiene; do not punish actual resale price—use funding and merchandising carrots, not price-fixing sticks.
• Platform data: Distributor supplies sell-out dashboards; principal can access anonymized store analytics for replenishment and demand-shaping.

7) Tax, customs & FX that change your margin

• VAT & WHT: Confirm who accounts for VAT on local sales; withholdings on services (marketing, training).
• Customs: HS classification, valuation, and any bond benefits for re-export or processing; ensure commercial terms match documentation (Incoterms®, insurance).
• FX: If the principal is a foreign exporter, align payment tenor with Bangladesh Bank’s export-proceeds expectations embedded in contracts and LCs (on the buyer side).
• Transfer pricing (intra-group): If your “distributor” is related, keep arm’s-length margins and contemporaneous files.

8) Sector snapshots (how distribution differs)

• FMCG & beverages: Rapid replenishment, strong POS marketing rules, expiry/FEFO controls, and recall readiness.
• Electronics: Warranty logistics, spare parts minimums, authorized service centers, and anti-tamper packaging.
• Healthcare & devices: Regulatory registrations, cold chain, adverse-event reporting, and tender compliance.
• Auto & spares: Selective distribution, workshop certification, and diagnostic tools/IP boundaries.
• Software/SaaS: VAR agreements with license compliance, audit rights, and export-control clauses.

9) Negotiation choreography that works

1. Paint the economics. Bring a one-page P\&L showing how minimums, rebates, co-op funds and service levels translate into sustainable margin.
2. Sequence the red lines. Cap liability; define IP/license and data access; lock audit and recall rules; then fine-tune commercial flexibility (discount ladders, quarterly targets).
3. Link exclusivity to performance. Make the traffic light explicit: green (renew), amber (cure & support), red (de-exclusive or terminate).
4. Set a sunset from day one. Pre-agreed exit choreography avoids hostage situations.

10) Common failure points (and how we fix them)

• RPM by accident. Sales emails that “require” a resale price or penalize discounting; fix by adopting non-binding RRP/MAP language and incentive-based funding. (Bangladesh Laws)
• No data, no forecasting. Without sell-out feeds, your factory and LC planning are blind. Bake data cadence and audit rights into the agreement.
• Recall chaos. Contracts omit traceability and cost-sharing; solve with a recall annex and serial tracking.
• Termination mess. No sell-off plan, inventory buy-back, or customer/warranty handover—write them in.
• Platform leakage. Agreements ignore e-commerce; adopt selective distribution criteria and platform-store rules.

11) A 90-day Distribution-Readiness Plan (copy/paste into your PM tool)

Days 1–15 — Diagnose

• Map current channels by territory and platform; list all distributors/agents.
• Pull the contract spine (agreements, price lists, brand manuals, data feeds).
• Identify RPM risk and data gaps; freeze ad-hoc pricing emails. (Bangladesh Laws)

Days 16–45 — (Re)Template & Train

• Roll out TRW’s Bangladesh-ready distribution master + e-commerce and recall annexes.
• Train sales/marketing on competition-law do’s/don’ts and consumer obligations (warranty, complaint SLAs). (Bangladesh Laws)
• Stand up sell-out dashboards and serial tracking.

Days 46–90 — Renegotiate & Lock

• Convert exclusivity into performance-based rights; install minimums and coverage KPIs.
• Add audit, anti-grey-market, and platform controls.
• Sign transition/exit schedules (buy-back, sell-off, handover, non-solicit).

12) Distribution Agreements — TRW Summary Table

13) FAQs — fast answers for commercial teams

Is exclusivity legal in Bangladesh?
Yes, when justified and proportionate. Tie it to objective performance (minimums, coverage, service) and avoid using it to foreclose competitors or fix prices. (Bangladesh Laws)

Can we enforce a minimum resale price (MRP)?
You can set recommended prices and MAP for advertising, but do not fix resale prices or punish discounting—this risks violating the Competition Act. Use co-op funding, rebates and merchandising instead. (Bangladesh Laws)

Who handles warranties and recalls?
Make your distributor the front line with contractual SLAs and reporting; principal supports with parts/tools. Ensure practices respect the Consumer Rights Protection Act. (Bangladesh Laws)

What forum for disputes?
For cross-border networks, choose arbitration (clear seat/rules/language) with court interim relief for urgent injunctions; pair it with well-drafted Bangladesh-law or neutral-law governing clauses.

14) TRW’s cross-border edge (what you get)

• Bangladesh-ready master templates for distribution, selective distribution, agency, VAR and franchise-lite, with e-commerce and recall annexes.
• Competition-law hygiene: RPM-proof commercial playbooks, training, and audit mechanics. (Bangladesh Laws)
• Consumer-grade after-sales frameworks aligned with Bangladesh consumer-rights expectations. (Bangladesh Laws)
• Anti-grey-market program: serialization, sell-out dashboards, platform enforcement.
• Disputes toolkit: injunction packs for counterfeit/brand abuse; arbitration-first drafting with enforcement pathways.

Speak with TRW’s Commercial & Distribution Team

Phones: +8801708000660 • +8801847220062 • +8801708080817
Emails: info@trfirm.com • info@trwbd.com • info@tahmidur.com
Global Law Firm Locations: Dhaka — House 410, Road 29, Mohakhali DOHS • Dubai — Rolex Building, L-12 Sheikh Zayed Road.

References

1. The Contract Act, 1872 (Bangladesh) — formation and remedies framework for private agreements. (Bangladesh Laws)
2. Competition Act, 2012 (Bangladesh) — prohibitions on anti-competitive agreements and abuse of dominance (RPM caution). (Bangladesh Laws)
3. Consumers’ Right Protection Act, 2009 (Bangladesh) — consumer-facing obligations (warranty, returns, accurate information). (Bangladesh Laws)

Want a sector-specific pack (electronics, FMCG, healthcare, auto, SaaS)? We can deliver a ready-to-sign template set with negotiation playbooks, clause banks and compliance checklists tailored to your channels and growth plan.