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If your company is doing well in its country of origin, you may have considered investing in a foreign branch. By bringing your business to another country, you can work with a new, unsaturated market of customers and garner unique interest in your product or service. Many companies are expanding their business by offering their products or services in Brazil. Brazil is the ideal place for investments and business ventures right now.

Expanding to Brazil

If you do decide to expand to Brazil, you’ll need to make a decision about how your product or service will be sold there. Your first option is to hire a new sales force and send them there. This option is obviously costly and will take a lot of time to be implemented. Another option is to hire a commercial representative to act as a third party. This representative can make decisions on behalf of your company and bind you to contracts in Brazil. This option is great for smaller businesses, but does not work as well on a larger scale.

Consider Distribution Agreements in Brazil

For businesses that are large and unwilling to hire an entirely new sales force, distribution agreements are the perfect option. Unlike in a commercial representation agreement, you will actually sell your goods to a distributor under a distribution agreement. When you enter a distribution agreement, you give the distributer sole rights to resell your goods in a certain territory and agree not to sell your goods to any other distributers in that area. In Brazil, distribution agreements are separated into two different categories:

  • Commercial Distribution Agreements – You would only enter into a commercial distribution agreement if you were selling automobiles or automobile parts. In addition to automobiles, trucks, busses, motorcycles, and agricultural tractors are all part of commercial distribution agreements. Any other type of product should be distributed under an ordinary distribution agreement.
  • Ordinary Distribution Agreements –Under ordinary distribution agreements, there is no specification of what can or cannot be distributed or resold. The distributor and producer can define their relationship solely on the contract they have entered.

Terminating an Agreement

Distribution agreements can be terminated for the following reasons in Brazil:

  • A defect that renders the contract void
  • Fulfillment of all duties outlined in the contract
  • Non-performance on behalf of either party that breaks the terms of the contract
  • Mutual agreement of termination
  • Lawful termination

Entering into a distribution agreement can be an efficient way to expand your business there. You don’t have to spend the resources on hiring an entirely new sales team, you won’t have to make frequent trips back and forth, and you won’t have to trust your business’ success with a single representative. If you are thinking of entering into a distribution agreement, you should first make sure that the distributer is reputable and successful in Brazil. You should also take it slow at first and avoid sending too much inventory all at once until you understand the capabilities of the distributor. If you’d like to learn more about a single distributor, you should consider seeking advice from a Brazilian attorney.

Phone: 212-300-7174