Sealing the Deal: Selecting the Right Distributor for Your Exports

After a candidate has reviewed the International Distribution Prospectus (IDP)—learn how to create one in my previous article— selecting the right candidate to become one of your international distributors is still a few steps away.

It is much easier to grow a successful and strong distribution network when you select the right distributors to start with. If you select the wrong candidates, it will be very hard to develop them into productive international distributors and to keep them for the long run. Thus, it is critical to not rush the International Distributor Screening and Selection Process (see the second article in this series).

If the candidate has reviewed the IDP and has expressed interest in moving forward with the Screening and Selection Process, it likely means that the candidate:

• Can meet the requirements and candidate profile described in the IDP.
• Has questions that were not addressed in the IDP or needs further clarification.
• Wants to have a conversation to get to know you.

At this point, it is important to be prepared to conduct the next step in the Screening and Selection Process: interview top candidates. This interview should be neither too formal nor unstructured. The objective is to gather information from the candidate, provide information to the candidate and gauge whether you would like to work with this candidate.

Here is a short list of questions you can use in this interview. Think about it as a job interview in which the candidate is applying for the distributor job:

• Why are you interested in distributing our products versus products from competitors?
• What is your experience in this industry?
• Have you imported products from the United States?
• Have you introduced other products as a distributor?
• What other brands are you currently distributing?
• What is the key to successfully introducing a brand like ours in your country?
• How do you plan to support the launch and expansion of the brand?
• Would you be willing to provide a (monthly, quarterly) report about your marketing and sales efforts, as well as sales information?
• Would you have a dedicated manager for our brand?
• Can you provide references from non-competing companies you have distributed products from?

This interview is another opportunity for candidates to self-qualify or self-disqualify themselves. This is also an opportunity to gauge whether you would invite this candidate to complete the International Distributor Application if the candidate is interested in doing so.

After the interview, one of the following scenarios will play out:

• Neither you nor the candidate is interested in moving forward: The selection process ends.
• You are not interested in moving forward: The selection process ends.
• The candidate is not interested in moving forward: The selection process ends.
• Both you and the candidate are interested in moving forward: The selection process continues.

If you and the candidate are interested in moving forward, the next step is for the candidate to complete the International Distributor Application. (Learn how to create one here).

How the U.S. Commercial Service Can Help

Once you receive the candidate’s application, thoroughly review the information submitted. Make sure to take an in-depth look at the marketing plan and set up a follow-up meeting if you have any questions about information submitted. If you are satisfied, I highly recommend that you take one more step before approving the application and signing the International Distribution Agreement. Ask the U.S. Commercial Service office located in the country where the applicant is located to conduct a full International Company Profile (ICP).

A full ICP provides exporters with a comprehensive background report on the candidate’s company, including general business information, background and product information, key officials, references contacted by the International Trade Administration (ITA), financial data/creditworthiness information, reputational information, a site visit, interviews with principals, and analysis of information collected. You can read more about company profiles here.

I always took this step before awarding the distribution rights to a candidate abroad as one final and critical check of the veracity of the information provided. If everything checks out, then this is the moment to send the candidate a draft of the International Distribution Agreement. Encourage the candidate to review the information thoroughly and ask any questions.

At this time, the candidate will bring up important questions and try to negotiate for the distribution rights of multiple countries or regions, deep discounts, long-term agreements and more. It is extremely important that you are ready to deal with these questions and negotiate effectively. I conducted a presentation on how to prepare and negotiate with distribution candidates. You can watch The Bare Knuckles Guide to Negotiating with International Prospects here.

One more piece of advice: The final International Distribution Agreement should be drafted by an international law attorney, as they will make sure to include clauses that comply with the legal and commercial laws of the country you are going to export to and remove clauses that do not.

If the candidate agrees with the terms of the International Distribution Agreement, the ICP confirms the information submitted in the application is reliable, and you feel comfortable working with this candidate, it is time to sign the agreement.

Once you send the candidate the final version of the International Distribution Agreement and you receive the agreement signed, make sure to countersign it and send the candidate a copy back.

Congratulations! You have successfully signed an international distributor. However, the following days and weeks are critical for the success and development of your new distributor in the short and long term. This is what we will discuss in the next article: How to Keep, Manage and Grow Your New Distributors into Successful, Long-Term Distributors.

Questions to Ponder

• Have you approached your local U.S. Commercial Service office to discuss the services they can provide to support your efforts in finding, screening and selecting international distributors? You can find your local office here.
• After reviewing the video included above, what ideas can you implement to be ready when a candidate wants to negotiate the terms of the International Distribution Agreement?

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