Exclusivity agreements can be great for your business. By having exclusive access to certain brands or product, customers will be drawn to your store. Having exclusivity over certain product can increase your credibility and exclusivity to your customers.
Selling products that are not sold elsewhere, whether under exclusive arrangements or private label, can entice customers who not only purchase these exclusive products but generally end up spending money on additional and incidental purchases.
In drafting a robust exclusivity arrangement, it is important to consider a number of factors, including:
- the goods to which the exclusivity applies;
- the region for exclusivity; and
- the time frame for exclusivity.
It is important to ensure that you have a lawyer review your exclusivity arrangement before you sign. If a dispute arises or if the exclusivity contract is breached – it can be costly for both parties. In 2013, fashion designer, Kim Ellery, was involved in a legal dispute with Myer for allegedly breaching her exclusivity contract by selling her products to rival, David Jones, this matter was settled out of court. However, having such disputes can be costly in time, money and diversion of attention away from your business.
Generally the Australian Competition and Consumer Commission does not support exclusivity arrangements, however in some instances they are permissible:
- If the exclusivity may result in additional investment in the brand. For example, you may significantly invest in advertising the product and your exclusivity.
- Whether the exclusivity would reduce the competition in the market for the relevant product.
Along with exclusivity agreements, Gladwin Legal can assist in identifying other areas of your business that could be better protected through legal documentation.