Distributors

News & Analysis as of

The Origin and Operation of the Famous 70% Rule Explained

The 70% rule derives from the 1979 FTC Amway decision in which an administrative law judge recognized that Amway’s 70% rule helped prevent inventory loading (it is not a retailing rule). Basically, the Amway rule provided: at...more

Tennessee Recognizes Personal Use in New Legislation

On July 1st, 2014, Tennessee became the latest government/regulatory entity to adopt updated MLM/Pyramid legislation recognizing “personal use” in pyramiding analysis. The Tennessee language is similar to language adopted...more

Doing Business in Canada: E-Commerce

E-COMMERCE - Canada has a vibrant Internet community. Because of the great expansion of the Internet in Canadian homes and businesses, Canada and its provinces have, in recent years, regulated Internet activity and...more

Drug Distributor and Pharmacies Obtain Partial Dismissal of State and Federal FCA Claims

On June 10, 2014, a New York federal court dismissed, in part, state and federal False Claims Act (FCA) claims brought against Novartis Pharmaceuticals Corporation and pharmacies to which it distributed (CVS Caremark Corp.,...more

Commission-Based Sales Agreements for Medical Supplies and Equipment: More Whistleblower Activity on the Horizon? - A Wide Range...

The common industry practice of compensating independent contractor sales representatives on a "percentage of sales" commission basis may be creating an enhanced risk of False Claims Act liability for illegal kickbacks in...more

Physician Owned Distributorship Concerns Continue to Make News

On June 17, 2014, Southern California Public Radio affiliate KPCC broadcasted a report about physician-owned distributors of implantable medical devices (“PODs”) and the legal and ethical concerns that are raised when POD...more

An Export Plan Should Include the Consideration of U.S. Distribution Laws if Selling Into the United States Through Sales...

A Canadian or other foreign company looking to obtain a presence in the U.S. market without having to set up its own U.S. sales operation may consider using intermediariesn such as independent distributors and sales...more

Focused on Franchise Law - May 2014

FRANCHISOR 101: When is Unreasonable, Reasonable? Crown Imports, LLC (Crown) imports Corona beer from Mexico. In 2008, two of Crown's Southern California distributors, Classic and HBC, agreed that Classic would buy...more

United States: The “Top Ten” Things For A Supplier To Consider In Terminating A Distributor

Regardless of labels like “dealer,” “distributor” or “reseller,” there are some fundamental issues that demand attention whenever a supply relationship is involuntarily terminated. We work with suppliers in planning and...more

Insuring Your Business - March 2014: Is That Covered? Timely Reporting of Food Claims

When food producers and distributors are faced with a product recall, one of the most common questions is: How soon, if at all, do you report the claim to your insurance company? The answer is simple—you should be reporting...more

Focused on Franchise Law - February 2014

FRANCHISOR 101: Franchisor Successfully Fends Off Fraud Claims - There are circumstances when a fraud claim will not succeed against a franchisor. In Dunkin' Donuts Franchised Restaurants, LLC v. Claudia I, LLC, a...more

Distributor FAQ: As a distributor, can I use display booths to sell my company’s products? Is there a limit on the time I can...

As a distributor, can I use display booths to sell my company’s products? Is there a limit on the time I can spend selling at a booth? First, check the company policies, as they will be the guiding rule. Most companies...more

Distributor FAQ: In regards to event sales, such as fairs, kiosks, vending machines, etc., am I authorized to sell my company’s...

Most companies would prohibit sales in flea markets, swap meets, vending machines or garage sales. It is generally viewed that such locations dilute the value of the company’s products and opportunity. Companies typically...more

Is It Illegal to Have Distributors Earn Income by Referring Others?

We are often asked by executives starting a network marketing company if they can have consultants earn income by referring others and if it’s legal. Effectively, multilevel marketing is the sale of products through...more

Common Questions from MLM Executives: What do I do with distributors who go passive?

It has long been recognized that there is high attrition rate among MLM distributors, perhaps as high as 80-90%. The vast majority of MLM consultants are part time and they join and leave for many reasons. The fault is not...more

Spain: Approval of a simplified system for the fulfillment of regulatory duties by the gambling industry

The Spanish Parliament has approved this week the so-called Market Unity Act. This piece of legislation is aimed at simplfying the difficulties of providing services or manufacturing or distributing goods connected with...more

Why Do Distributors Join, Stay or Leave a MLM Company?

If you are a network marketing company or a distributor, you know that recruiting and retention are the lifeblood of the business. What factors make companies successful and the distributors successful? Of course, a...more

Distributor Q&A: What do I do with distributors who go passive in my downline?

MLM attrition is high. This is a fact of life. All of those distributors, who you have signed up, have competing demands on their time. So, if they go passive, it is not your fault. If that happens, you should give it a good...more

What Is the Benefit of Recruiting Experienced Consultants?

When you are starting your MLM, direct selling, network marketing, or party plan business, you’ll find that recruiting experienced distributors is often essential to your company’s success. And if you don’t have the...more

Beer Distribution Law - September 2013

The beer industry is one of the most highly regulated industries in the United States. Every state oversees the sale and distribution of beer, and the differences among the states' regulatory processes result in a maze that...more

Top fashion legal topics – #6 Distribution Contracts

We continue our series for the Milan Fashion Week. We have been discussing in the past various contractual options for devising distribution strategies in the fashion & retail sectors, from franchising and network...more

What To Ask: Assessing Third Party Risk Management Solutions

The risks posed by third party relationships (vendors, suppliers, agents, distributors, resellers, etc.) are huge – and often unaddressed. Regulations continue to increase as businesses become more global, and more and more...more

Focused on Franchise Law - August 2013

FRANCHISOR 101: CALIFORNIA REQUIREMENTS ON NEGOTIATED TERMS MAY CHANGE - The California Franchise Investment Law and the California Code of Regulations currently require franchisors registered in California to disclose...more

Auto Parts Distributor Avoids Liability In Robinson-Patman Suit

On July 19, 2013, the Ninth Circuit affirmed an award of summary judgment to an aftermarket auto parts distributor that had received better prices than a competitor. Gorlick Distribution Centers, LLC v. Car Sound Exhaust...more

Reseller vs. License By Richard Hsu [Video]

Richard Hsu, a technology transactions and intellectual property partner in the Mergers & Acquisitions Group at Shearman & Sterling, discusses the difference between a reseller or distributor agreement with a technology...more

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