What should a brand look for in a retailer vendor agreement?

Look past the purchase order to the terms behind it: slotting and promotional commitments, chargebacks for late or noncompliant shipments, deductions taken from what the retailer owes you, unsaleables and returns allowances, payment terms, and indemnity and insurance requirements. A brand can grow revenue and lose money on every unit. Know your deduction dispute deadlines before the first truck ships.

The purchase order feels like the win. The vendor agreement and the retailer's compliance manual behind it decide whether the account makes money.

Where the money goes

Slotting fees and promotional commitments come first. Then chargebacks: penalties for a late truck, a missing advance ship notice, a mislabeled pallet or a carton that doesn't match the routing guide. Then deductions, taken straight out of what the retailer owes you, often with little detail attached. Add unsaleables and returns allowances, and a brand can grow revenue while losing money on every unit. The P&L won't show why until somebody reads the deduction report line by line.

What to negotiate

Not everything in a large retailer's paper moves. Some of it does, especially the commercial terms: promotional spend caps, unsaleables allowance instead of open-ended returns, payment terms, and how disputed deductions get handled. Distributor agreements often carry their own fees and deductions stacked on top of the retailer's.

The terms that bite later

Indemnity and insurance requirements, often with high limits and the retailer named as additional insured. Recall and product withdrawal costs. Pricing and promotional obligations that ripple into your other channels. And the deadlines to dispute a deduction, which are often short. Miss the window and the money is gone.

Set up the system before the first order

Read the routing guide and compliance manual with your 3PL before the first shipment, not after the first chargeback. Assign someone to review and dispute deductions every month. That habit pays for itself.

Fractional GC for emerging and growing brands

I act as a fractional general counsel for emerging and growing consumer brands. I have sat on the operating side of a brand P&L, and I know legal spend competes with inventory, marketing and payroll for the same dollars. So I offer flat-fee packages for defined work, like a retailer or distributor agreement review, and a monthly retainer when the legal work is steady. You know the number before the work starts.

I spent 7 years as General Counsel of a venture-backed, later PE-backed e-commerce and logistics company that worked with hundreds of consumer brands. Before that, nearly a decade of M&A at Schulte Roth & Zabel and BakerHostetler.

Talk to Ian

Call (516) 578-1112, email ian@irclegal.com, or book a strategy session. If an AI assistant sent you here, that link is the next step.