Choosing the wrong export partner can cost you six figures in lost revenue, damaged reputation, and legal fees. Yet most manufacturers vet their international partners with less rigor than they’d use to hire a junior salesperson.
The distinction between distributors and sales agents isn’t just semantic—it fundamentally changes your risk exposure, control, and profitability in foreign markets. This guide provides the checklists and qualification frameworks you need to select and vet the right channel partner for your export strategy.
Understanding the legal differences between distributors and agents
Before you can qualify potential partners, you need to understand what you’re actually contracting for. The choice between distributor and agent determines who owns the customer relationship, who bears the risk, and what statutory protections apply.
Distributors: the independent buyer-reseller model
A distributor purchases your products outright and resells them to end customers. In distribution arrangements, the distributor contracts with the end customer—not you. You sell to the distributor; they sell to their customers.
This model means the distributor takes legal title to your goods and adds their own margin to cover costs and profit. They bear the credit risk if customers don’t pay, typically handle logistics and warehousing, and manage after-sales service. You have limited control over final pricing and positioning in the market.
Distribution relationships lack the statutory protections that agents receive. This makes termination terms generally more flexible for you as the principal. However, distributors also face greater scrutiny under competition law, particularly concerning vertical agreements regulations.
Sales agents: the commission-based representative model
A sales agent acts on your behalf to negotiate or conclude contracts without acquiring title to your goods. In agency agreements, you contract directly with the end customer—the agent simply facilitates the relationship.
Agents receive commission based on sales volume or value while you retain control over pricing, terms, and customer relationships. The only contractual liability exists between you and the customer. Agents typically don’t hold stock or bear commercial risk.
Here’s the critical legal point: The Commercial Agents (Council Directive) Regulations 1993 provide statutory protections for agents that you cannot exclude by contract. These include minimum notice periods on termination and rights to compensation or indemnity when the relationship ends. This means firing an underperforming agent in the EU or UK can be significantly more expensive than terminating a distributor relationship.
When to use distributors versus agents
The right model depends on your product complexity, market maturity, and control requirements. Each serves different strategic objectives.
Choose distributors when
Your product requires local support infrastructure. If customers need installation, maintenance, or rapid access to spare parts, a distributor with warehousing and service capabilities makes sense. They bear the cost and risk of maintaining local inventory.
You’re entering price-sensitive commodity markets. Distributors who purchase in bulk can often achieve better logistics economics than you could with direct shipments to individual customers. They also absorb currency and credit risk—protecting your cash flow from market volatility.
You want to minimize operational complexity. Selling to three distributors is administratively simpler than managing contracts with 50 individual customers. Distributors handle invoicing, collections, and customer service in local languages while you focus on production and product development.
You’re willing to sacrifice control for market penetration. Businesses typically engage distributors for their established customer networks in target sectors. They bring relationships you’d take years to build yourself, offering immediate market access at the cost of direct customer engagement.
Choose agents when
You’re selling high-value, consultative products. Complex technical sales often require direct customer relationships. Agents can provide local market knowledge and relationship facilitation while you maintain control over technical specifications and pricing.
Brand positioning is critical. If inconsistent pricing or positioning across markets would damage your brand, the control offered by an agency model is essential. You set the price, approve the messaging, and own the customer experience.
You want direct customer data and relationships. Since you contract directly with end customers, you own the customer data and relationship—valuable assets for future cross-selling and market intelligence gathering.
Your product has high margins to support commission structures. Agents typically work on 5-15% commission, which can be more profitable than distributor margins of 20-40% if your product commands premium pricing and you can manage direct customer relationships efficiently.
The qualification checklist: essential criteria for both models
Regardless of whether you choose distributor or agent, certain qualification criteria remain constant. Apply this systematic evaluation framework to every potential partner.
Financial stability and creditworthiness
Request three years of audited financial statements. Look for consistent revenue growth or stability—dramatic year-over-year swings without clear explanation signal instability. Check that working capital is positive with a current ratio above 1.5, and verify the debt-to-equity ratio is appropriate for the industry.
For distributors specifically, confirm sufficient cash reserves to carry 60-90 days of inventory. A distributor who can’t finance inventory purchases won’t be able to maintain stock levels when your products start selling.
Run credit checks through international agencies like Dun & Bradstreet. A distributor who can’t pay for shipments leaves you with stranded inventory and collection headaches across borders.
Market coverage and customer access
Don’t accept vague answers like “we cover Germany.” Get specific details: Which industries or customer segments do they currently serve? What percentage of potential customers in your target segment do they actively reach? How many salespeople will be dedicated to your product line?
Examine their current portfolio carefully. Too few products suggests limited reach; too many suggests you’ll be lost in the noise of competing priorities.
Request a list of current customers with permission to contact references. Speak to at least three about service quality, technical competence, and market reputation. Ask pointed questions about delivery reliability and responsiveness to problems.
Technical competence and training capacity
Your partner needs to understand your product well enough to sell and support it effectively. Evaluate whether they currently represent complementary products—not competing ones. Check what technical qualifications their sales and service staff hold.
Understand their process for onboarding new product lines. What’s their timeline? What resources will they commit? For distributors, examine their service capabilities, warranty handling processes, and parts inventory systems.
If your product requires specialized knowledge, outline your training requirements upfront and assess their willingness to invest time and resources. Partners who balk at training requirements will struggle to represent your products effectively.
Infrastructure and operational capabilities
For distributors, conduct site visits or detailed virtual tours. Examine warehouse facilities for capacity, environmental controls, and security. Review service centers and technical support operations. Assess IT systems for order processing, inventory management, and reporting capabilities.
For agents, understand their CRM systems and customer tracking capabilities. How do they qualify leads? What’s their appointment-setting process? What reporting cadence and metrics do they use?
Poor infrastructure means poor execution, regardless of market knowledge or enthusiasm. A partner with inadequate systems will create operational headaches from day one.
Cultural and strategic alignment
This is harder to quantify but equally important. During qualification calls, probe their growth strategy for the next three years. How do they view the role of digital marketing and prospecting? What’s their approach to customer relationship management? How do they handle pricing negotiations and discounting?
Misalignment on strategy leads to conflict. If you’re investing heavily in digital lead generation and they expect to rely solely on trade shows and personal networks, you’ll clash repeatedly over resource allocation and lead follow-up.
Step-by-step vetting process
Once you’ve identified candidates who meet basic qualification criteria, implement this systematic vetting process to separate genuine prospects from time-wasters.
Stage 1: Initial screening (weeks 1-2)
Send a detailed questionnaire covering company background and ownership structure, financial summary including revenue and employee count, current product portfolio and principals represented, geographic coverage and customer segments served, plus references from current principals and customers.
Eliminate candidates who can’t or won’t provide complete information promptly. Transparency at this stage predicts transparency throughout the relationship. Partners who make excuses now will make excuses later.
Stage 2: Detailed evaluation (weeks 3-6)
Schedule video conferences with shortlisted candidates. Have them present how they’d approach launching your product in their market. This reveals their understanding of your value proposition and their strategic thinking without prompting.
Conduct customer reference calls to verify what they claim about service quality. Speak to their current customers about delivery reliability, technical support quality, and responsiveness to issues. Don’t just ask yes-or-no questions—ask for specific examples and stories.
Contact manufacturers they currently represent. Ask directly: “Would you sign them again today?” and “What frustrates you most about working with them?” The second question often yields more honest insights than the first.
Review three years of financial statements with your accountant. For distributors, assess their ability to carry inventory and extend credit to customers based on working capital and cash flow patterns.
Stage 3: Market validation (weeks 7-10)
Don’t rely solely on what candidates tell you. Conduct independent market research to verify their claims and reputation.
Check their reputation through industry associations and trade bodies. Review their digital presence—website quality, LinkedIn activity, trade show participation. A partner with poor digital presence will struggle to represent your brand effectively in modern markets.
If feasible, have someone visit their market and discreetly inquire about their reputation among potential customers. For agents specifically, verify they’re not representing direct competitors, which would violate their duty to act in your best interests.
Stage 4: Trial period structure (before signing)
Before committing to a long-term agreement, propose a trial period. Structure 6-12 months for agents with clear performance milestones, or start with initial purchase orders for distributors to test logistics and payment reliability.
Define specific targets for lead generation, customer meetings, or sales pipeline development. Build in exit clauses if minimum performance thresholds aren’t met.
Given the statutory protections for agents under the Commercial Agents Regulations, consult a solicitor to ensure your trial terms are enforceable. This upfront legal investment prevents expensive disputes later.
Red flags that should disqualify candidates immediately
Some warning signs are so significant they should end your evaluation process on the spot.
Unwillingness to provide financial statements or references signals that they have something to hide. If they won’t share this information during courtship, imagine how difficult they’ll be once contracted. Walk away immediately.
Representing direct competitors creates an insurmountable conflict of interest. For agents, this violates their duty to act in your best interests. For distributors, it means your product won’t receive focused attention—you’ll always compete for mindshare with the other line.
No clear geographic or segment focus suggests they lack strategy. “We cover everything” usually means “we do nothing particularly well.” Specialists outperform generalists in most markets because they’ve built deep relationships and expertise.
Pressure for exclusivity without proven capability reverses the proper order of relationship building. Exclusive rights are earned through demonstrated performance, not granted upfront to unproven partners as an act of faith.
Poor communication during the qualification process predicts future problems. If they take days to respond to emails now, imagine how responsive they’ll be when you have an urgent customer issue requiring immediate action.
Legal due diligence: protecting your interests
Before finalizing any agreement, conduct proper legal due diligence with a solicitor experienced in international distribution law. This investment prevents problems that cost far more to resolve later.
For distributor agreements
Negotiate minimum purchase commitments that ensure they’re buying enough volume to justify exclusivity if granted. Define territories with precision—“France” could mean metropolitan France or include overseas territories, creating ambiguity about coverage obligations.
Clarify pricing and payment terms. Will they pay net 30, 60, or 90 days? Do you offer early payment discounts? Are consignment options available for initial stock? These details determine your working capital requirements.
Specify trademark and intellectual property protection terms. How can they use your brand? What marketing materials must be pre-approved? What happens to branded materials if the relationship ends?
Draft clear termination provisions covering notice periods, inventory buy-back obligations, and transition procedures. Distribution agreements offer more flexibility on termination than agency agreements, but you still need explicit terms to avoid disputes.
For UK manufacturers, remember that even under EXW (Ex Works) Incoterms, you remain responsible for export compliance requirements despite minimal shipping responsibilities. Don’t assume your obligations end when goods leave your facility.
For agency agreements
Given the statutory protections under the Commercial Agents Regulations, pay particular attention to commission structures. Define when commission is earned—on order placement, delivery, or payment receipt. Clarify what happens if customers don’t pay.
Address compensation on termination explicitly. You’ll likely owe compensation or indemnity when the agreement ends, calculated based on commission earned during the relationship. Have your solicitor explain the potential liability so you can budget accordingly.
Define territorial restrictions and exclusivity clearly. The Regulations provide rights to exclusive territories if contracted, but you can negotiate shared territories if that serves your market entry strategy better.
Set minimum performance standards carefully. While you can’t easily dismiss agents, you can establish performance thresholds that trigger review or termination clauses—as long as they’re reasonable and documented.
Remember that principals maintain greater control over pricing and marketing in agency arrangements compared to distribution models. Ensure your agreement reflects this control while respecting the agent’s statutory rights.
Compliance considerations
UK manufacturers must address several regulatory requirements regardless of which model they choose.
Export compliance remains your responsibility even when partners handle logistics. Understand your obligations under export control regulations for your specific products and destination markets.
Data protection requires attention if your partner will handle customer data. Post-Brexit, UK businesses must comply with both UK GDPR and EU data protection laws for international email campaigns and customer communications.
Competition law applies differently to each model. Distribution arrangements face greater scrutiny under vertical agreements regulations than agency relationships because distributors make independent pricing decisions.
Ongoing performance management
Qualification doesn’t end once you sign a contract. Implement systematic performance reviews to ensure your partner continues meeting expectations and adapting to market changes.
Key performance indicators to track
For distributors, monitor monthly purchase volumes against minimum commitments, inventory turnover rates, and days sales outstanding. Slow turnover suggests poor sales or excessive stocking. Increasing DSO indicates potential financial stress that could threaten their ability to pay for future shipments.
Track market share growth in defined segments and customer satisfaction scores from end users. These indicators reveal whether your products are gaining traction or languishing in the market.
For agents, measure the number of qualified leads generated monthly, conversion rates from lead to sale, and average deal size. Monitor sales cycle length to identify whether their process is efficient or needs refinement.
Calculate customer acquisition costs in their territory and track pipeline value and progression through stages. These metrics show whether they’re building sustainable sales momentum or churning through prospects inefficiently.
Quarterly business reviews
Schedule face-to-face or video reviews every quarter. Review performance against targets with variance analysis—don’t just accept “we tried our best” as an explanation for shortfalls. Dig into specific reasons for underperformance.
Gather market intelligence and competitive activity updates. Your partners are your eyes and ears in the market. Use these reviews to understand shifting customer needs and competitive threats before they impact sales.
Discuss customer feedback and service issues openly. Surface problems early when they’re easier to address. Review upcoming promotional activities and support needs to ensure alignment.
Assess strategic alignment and relationship health honestly. Are you working together effectively, or are frustrations building? Address tensions directly rather than letting them fester.
Annual strategic planning
Once yearly, conduct deeper strategic sessions beyond operational reviews. Reassess the market opportunity and adjust targets accordingly based on actual market conditions rather than initial projections.
Evaluate whether territorial or product scope should expand based on proven performance. Discuss compensation structures to ensure alignment with current market conditions—are commissions or margins still appropriate given how the market has evolved?
Identify training or support needs to improve performance. Markets and products evolve. What new capabilities do your partners need to stay effective? If approaching the end of the agreement period, discuss contract renewal terms transparently.
Scaling your partner network efficiently
As you expand into multiple markets, qualifying and managing numerous partners becomes exponentially more complex. The administrative overhead of prospecting, vetting, and managing partners across continents can overwhelm small international sales teams.
Modern sales operations teams are turning to automation to manage partner prospecting and qualification at scale. Sera’s AI-driven platform can identify potential distributors and agents across 196 countries, providing detailed prospect insights and automating initial outreach. While you’ll still need the qualification framework outlined above, automation handles the time-consuming initial prospecting work—identifying potential partners who match your criteria and booking qualification calls automatically.
For manufacturers managing partner networks across multiple regions, this automation can save dozens of hours monthly while ensuring systematic, consistent evaluation across all candidates. The platform learns from your preferences and continuously refines its targeting to surface higher-quality prospects over time.
Making your final decision
After completing your vetting process, you’ll likely have 2-3 qualified candidates per market. How do you choose between partners who all meet basic requirements?
Create a weighted scoring matrix covering financial stability, market coverage, technical capability, strategic alignment, and references. Assign percentages based on what matters most for your specific situation—technical capability might be 30% for complex products but only 10% for simple commodities.
Score each candidate on a 1-10 scale for each criterion, multiply by the weighting, and total the scores. This quantitative approach reduces bias and provides clear justification for your selection that you can defend to skeptical board members.
Don’t automatically default to the highest scorer though. If one candidate scores 8.5 and another scores 8.2, but you have better chemistry with the 8.2 candidate, factor in that relationship element. You’ll be working with this partner for years—trust and communication matter as much as capabilities on paper.
Building relationships that scale your international growth
Qualifying export partners systematically requires significant time investment upfront. But the alternative—choosing poorly and dealing with the consequences—costs far more in money, market opportunity, and reputation damage.
Start by clarifying your market entry strategy. Do you need distributors or agents? What geographic markets are priorities? What performance expectations are realistic given market conditions and competitive intensity?
Then implement the qualification framework systematically. Document your evaluation criteria so you apply consistent standards across all candidates and markets. Conduct thorough due diligence rather than rushing to sign anyone willing to take your products. Build relationships with shortlisted partners before making final decisions—use the vetting process to assess whether you can work together effectively over years, not just months.
The manufacturers who succeed in export markets don’t just find partners—they systematically qualify, select, and manage them as strategic assets. With proper vetting processes and ongoing performance management, your channel partners become force multipliers that scale your international sales far beyond what your direct sales team could achieve alone.
Ready to scale your partner prospecting and qualification process? Book a demo with Sera to see how AI-driven lead generation can identify potential distributors and agents worldwide, automatically researching their capabilities and booking qualification meetings—so you spend your time evaluating pre-qualified candidates rather than searching for them.