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With a commercial contract an individual – referred to as the principal – entrusts another individual – referred to as the commercial agent – on a full and regular basis and in an independent mediatory capacity, either to negotiate the vending and the purchase of goods on behalf of the principal, or to negotiate and contract such actions in the name and for the account of the principal. The formal requirements, in order for a specific individual to bear the right to act as a commercial agent, constitute the obligation for registering as a commercial agent at the competent tax authority as well as at the Chamber of Commerce and the Trades Insurance Fund. The commercial agent, who is recognized as such by and resides in a member-state of the EU and the E.E.A. and who occasionally contracts cross-border acts of commercial representation in Greece, is released from registering at the Chamber. It is considered, nonetheless, a prerequisite the fulfillment of the requirements for the exercise of the agency agreement in the member-state, where the main business activity is taking place.
This type of agency agreement bears the following particular aspect: an entrepreneur entrusts an independent professional, in return for payment or other consideration, to continuously and steadily, for a fixed or indefinite period, expand the customer network as well as to mediate and negotiate the drafting of contracts in the name and for the account of the entrepreneur. Moreover, it is a usual practice that the commercial agent is restricted to be active in a specific geographical region.
The commercial agent’s key elements constitute the independency of activity and the assumption of entrepreneurial risk and responsibility, acting, simultaneously, in the name and for the account of the principal for consideration, which, usually, is a commission on sales made and, in general, on promotional action by their part. Furthermore, with this type of agreement the principal entrusts the agent the exclusive promotion of their products in the specific geographical region as agreed.
Thus, this type of agreement in one hand enables the principal to further grow their business by expanding their clientele, on the other hand gives the commercial agent the opportunity to develop their activities based on somebody else’s reputation, given the fact that this activity constitutes a purely promotional action.
It is required that the agreement is made in writing. It is essential to be highlighted and noted the commercial agent’s statuary customer compensation, in case of termination of the agreement, provided that the commercial agent brings new customer to the principal during the period that the agreement in in effect, unless the termination is attributed to the agent’s fault or the agent themselves cancel the agreement, or, finally, in case the agreement is assigned to a third party by the agent’s initiative.
With regards to the exclusive distribution contract, the distributor undertakes the obligation to purchase and resell in their name and in their behalf, the producer-provider’s products and services, following faithfully the latter’s instructions, while the producer-provider commits not to deliver goods to third parties within the same distribution area. This particular type of contract differs from the commercial agency agreement, since in contrast to the commercial agent the distributor acts in their own name and in their behalf, reselling, essentially, the services and not just promoting them. Nonetheless, despite the freedom of the contract, the fact that the distributor acts in their own name and in their behalf does not necessarily entail a complete freedom of action from their part. On the contrary, the distributor’s inclusion to the producer-provider’s distribution network can be done in such a way that the limitations for the distributor’s general activity are laid down, while they are to follow faithfully the producer-provider’s orders, even arranging the layout of their offices the same way with the producer-provider’s.
The particularity of this type of contract lies in the fact that constitutes a non-regulated contract, which includes the elements of most contracts. The agreement is not required to be in writing for its conclusion, while the level of cooperation as well as the distributor’s inclusion or not to the producer-provider’s distribution network is a matter of agreement between the parties and mutual trust, which is an important element of the agreement said.
The commitments undertaken by the distributor are usually the purchase of a minimum percentage of products, the achieving of a minimum turnover, the single formulation of promotional activities etc. The distributor’s profit, in contrast to the commercial agent’s one, consists of a commission not on the sales made, but, on the contrary, on the difference of the profit, which results from the reselling of the products.
With the franchise contract the parties conclude an agreement in combination with the cooperation as established with the inclusion to the provider’s distribution. Specifically, a franchise contract (or Franchising) is considered the agreement pursuant to which one party, the franchisor, provides to the franchisee for a consideration the right to use all the franchisor’s rights of intellectual or/and industrial property, in order to promote the latter’s products and services to the final consumer. Essentially, in other words, the franchisee, gives a certain consideration to the franchisor for the acquisition of the right of use of the latter’s rights, organizing their business according to the franchisor’s organization and in a uniform way, following the same marketing policy. The consideration given to the franchisor usually constitutes either a certain amount of money, which the franchisor determines for the granting of their rights (entry fee for their distribution system), or the periodic payment of a specific percentage of the sales collection, or both, depending the agreement and the terms set by the franchisor themselves.
The franchisee is completely and uniformly integrated in the franchisor’s distribution system, and, due to the acquisition of the use of right of the intellectual and industrial property rights, they are obliged to comply with franchisor’s orders and to adhere to the marketing policy as formed by the franchisor, and, depending on the nature of the business, to participate in staff training as well as in the processing of advertising messages. The franchisor, respectively, is obliged to maintain the exclusivity within the agreed geographical region, where the franchise is active.
With regards to the duration of this contract, due to the franchisee’s absolute integration to the franchisor’s system and marketing, the Code of Conduct of the Franchise contract prescribes a period of time that allows the franchisee to amortize their initial investment. A five-year duration of time is viewed as reasonable, while, on the contrary, an excessive duration falls within the scope of the Regulation on Free Competition, according to which the excessive duration is considered contrary to the competition rules.