What Is a Retail Store License Agreement?
A Retail Store is stocked with goods from several brands and companies. However, to sell the products of other companies under its name, it requires an official retail business license or permission from the producer or the manufacturer of such goods. This is where a Retail Store License Agreement comes into place.
This agreement is typically entered into by the Retail Store Owner and the Company whose goods/products it plans to retail or sell. It lays out the terms of the license and the details of the deal that is agreed between the store owner and the company.
When Do You Need a Retail Store License Agreement?
This agreement serves as a formal agreement between the retail store and the company whereby the store owner is legally allowed the right to use the company’s name under its store. It also serves as a legal permit that allows the store to sell the companies’ goods and services under its label.
This agreement helps to bring about a well-defined and enforced structure in place that works for the benefit of the store and the companies concerned. Since it is legal and binding in nature, the party deviating from the agreement can also be held liable for damages/fines.
What Should Be Included in a Retail Store License Agreement?
A Retail Store Agreement should include basic licensing principles and clearly spell out the terms under which the store can decide how to get a retail license and to sell the products/services. In general, a Retail Store License Agreement should detail out the following elements:
- The term of license
- Possibility of renewal of license
- Granting the license
- Restriction on the license on territorial basis
- The use of licensed rights by the stores
- Approving the stores and the list that can sell the products
- The store design, construction, storage, location, ownership, and closure of the store
- Quality of the stores, the packaging of the products
- Advertising plans for the stores
- Insurance that is taken out by the stores
- Ownership of licensed rights
- Aduits, records and financial statement submissions
- Termination of the agreement
- Indemnification and limitation on liability
- Assignments and notices
- Types of products that can be sold
- Prices of the products that can be sold
- Restrictions and exclusivity of sale and transactions
How to Draft a Retail Store License Agreement?
All retail store license agreements whether it is retail business license, retail medical license, or retail food license or any other form of license, contain some basic provisions. These must be kept in mind when drafting this agreement
- Exclusivity or territorial restrictions
- Advances, royalties, minimum sales and time schedules
- Rights of monitoring and quality control
- Minimum inventories
- Minimum payments and royalties
- Strict timelines for release in the market
This agreement aims at creating a symbiotic relationship between the retail store and the company whose products it plans to sell. It should thus be laid out in a clear and concise manner and should not include complicated legal or business jargon. While the form of a Retail Store License Agreement may vary from organization to organization, it should be drafted to cover the minimum legal terms of the license. It should sufficiently protect the legal rights of both the parties to the contract and even provide remedies for breach.
In other words, the agreement should lay down the responsibilities and rights of each of the parties in a fair and transparent manner. It is advisable to rely upon an attorney’s services to draft and negotiate the Retail Store Licensing Agreement before signing.
Key Terms/Clauses of a Retail Store License Agreement
There are several types of Retail Store Licenses. Some of them are:
- The nature of exclusivity of the agreement
- The details of the parties entering into the agreement
- Whether the agreement has any domicile restrictions or can be used be a retail store chain everywhere
- The non-transferable rights and licenses to use the company’s name in promotion and retail sale of its products
- Terms of the license along with the clauses for renewal of the license
- The restrictions on the use of brand name as well as the jurisdictional limits on the use of the brand name
- Any indemnification for any loss to either party — material or non-material — for any activity that is not part of the contract
- Implied and explicit warranties and representations from both the parties
- The rights to inspections of the brand that the store is checking and the conditions under which such inspection will be allowed by the retail store
- Restrictions on sub-licensing
- Provisions for insurance
- Limits on the kind of discounts that can be provided by the retail store, and the kind of offers that will be allowed by the brand
- The nature of communication that is required by each party to the other before any major policy decisions are taken
- The circumstances that require communication between the parties and the circumstances in which both parties can act on their own without informing the other
A Store License Agreement is a written legal permit that allows the store to use the name of a company and sell its products under its own name. With the help of the agreement, the licensing company is protected against the unfair use or illegal sale of its brand name and products. Similarly, the store is legally allowed to retail the products of another brand under its name and seek legal remedy in case of undue cancellation of the license.
[Also Read: Distribution Service Agreement]
Sample for Retail Store License Agreement
Download a sample Retail Store License Agreement in PDF/DOC.