Commercial Agent vs Distributor in France: Which Should You Use?

Commercial agent vs distributor: the core difference under French law

The difference between a commercial agent and a distributor is structural, and everything else follows from it. A commercial agent (agent commercial) is an agent who negotiates — and possibly concludes — contracts in the name and on behalf of a principal (mandant), for a commission, under Article L 134-1 of the French Commercial Code (Code de commerce). It never becomes the owner of the goods and never carries the risk on the sale. A distributor does the opposite: it buys the products from the supplier and resells them to its own customers, on its own account and at its own risk, keeping the margin between its purchase price and its resale price.

Because the agent acts for another rather than trading on its own account, French law treats its activity as civil, not commercial, and an agent cannot own the business as a going concern (a fonds de commerce) in respect of the agency or claim the status of a trader on that basis (Cour de cassation, chambre commerciale, 26 February 2008, no. 06-20.272). The distributor, buying and reselling, is a trader dealing in its own name. This is why an intermediary that behaves as a distributor — buying and reselling, treating itself as bound to its own customers by the volumes it has negotiated — is not a commercial agent, whatever the contract says (Cour de cassation, chambre commerciale, 10 July 2007, no. 05-19.373).

The two roles can even sit in the same relationship, and they must then be kept apart. Where an agent also buys and resells some of the principal's products, that buy-and-resell activity has to be carefully separated from its representation activity, because it follows the ordinary rules of sale, not the rules of agency; run together, the arrangement can be requalified from an agency into a concession. In that resale activity the principal is a stranger to what the intermediary does — it cannot, for instance, be required to invoice the services the intermediary performs on its own account. The dividing line is always the same: acting in the principal's name for a commission is agency; buying and reselling in one's own name is not.

Ownership, risk and control: how an agent differs from a distributor

The structural difference plays out in three practical dimensions that usually decide which model a supplier wants.

Risk. The distributor carries the commercial risk of the goods it has bought: if the stock does not sell, or a customer does not pay, the loss is the distributor's. The commercial agent carries no such risk on the sales it brings, because the contracts are concluded for the principal's account; the agent bears only the risk of its own intermediation activity. An agent can be made to answer for a customer's default only if it has given a del credere (ducroire) guarantee, usually for additional remuneration, and even then its liability is generally limited to part of the unpaid sums.

Control. Because the agent sells in the principal's name, the principal fixes the terms on which the business is done and remains party to the contract with the customer. With a distributor, the supplier sells to the distributor, and the distributor then resells to its own customers on its own terms; the supplier does not control the resale relationship in the same way. A supplier that wants to keep a direct grip on pricing, customer selection and the terms of sale is closer to the agency model; one that wants to hand the market to a local partner that takes the risk and runs the customer relationship is closer to distribution.

Remuneration. The agent is paid a commission geared to the business it produces; the distributor is remunerated by the margin between its buying and selling prices. The two reward different things — the agent's selling effort, and the distributor's assumption of risk and its own commercial operation.

The del credere deserves a word, because it is the one point at which an agent can be made to look, in part, like a distributor on risk. By a del credere (ducroire) agreement, and usually for a supplement to its commission, the agent can guarantee — unless otherwise stipulated — the customer's failure to pay at maturity, and not merely the customer's insolvency. Even then it is generally agreed that the agent's liability is limited to a part only of the unpaid sums. This is a narrow, priced assumption of credit risk on specific business; it does not turn the agent into a distributor, which carries the full risk of everything it has bought as a matter of course.

Exclusive territory: how it differs for an agent and a distributor

Both models can be built around an exclusive territory, but exclusivity does different work in each. For a commercial agent, an exclusive geographic sector carries a specific statutory consequence: the agent is entitled to commission on business concluded during the contract with a customer belonging to that sector, whether or not the agent itself handled the transaction — the "sector commission" under Article L 134-6. The exclusivity is, in large part, a commission entitlement.

What the principal may do inside the agent's sector is shaped by the common-interest mandate. As a matter of principle the principal may still sell directly in the territory allotted to the agent, a solution consistent with the ordinary law of representation — but it may not use that faculty to the point of destroying the consideration for the contract by reducing the agent's mission to nothing. A clause allowing the principal to remove individual customers from the agent's sector has been upheld where it was confined to a genuine adjustment of the portfolio and did not, under cover of a modification, conceal a right to terminate without paying the indemnity. For a distributor, by contrast, exclusivity is a matter of the parties' contract and of competition law, not of a statutory sector-commission entitlement; the two exclusivities are not interchangeable, and a clause copied from one model into the other rarely does what its drafter intended.

Why the label does not decide: the requalification risk

The choice between agent and distributor cannot be made simply by naming the contract. Commercial-agent status is a matter of public order, and whether it applies depends not on the name the parties gave their contract but on the conditions in which the activity is actually carried out. A contract headed "distribution agreement" will be treated as a commercial agency if the intermediary in fact negotiates sales in the supplier's name; and an "agency" that in reality buys and resells will be denied the agent status and characterised as distribution or concession (Cour de cassation, chambre commerciale, 28 October 1986).

This matters because the two mistakes have opposite but equally expensive consequences. A supplier that appoints a "distributor" which in fact sells in the supplier's name may discover, on termination, that it has been dealing with a commercial agent all along and owes the statutory indemnity. A supplier that intends an agency but lets the intermediary buy and resell may lose the control and the competition-law treatment it was counting on. The way to control the outcome is to make the operation match the label — the flows of title, risk and invoicing must be consistent with the model chosen — not to rely on the heading of the contract.

The decisive consequence: indemnity versus abrupt-termination protection

The single most important difference between the two models, for a foreign supplier, is what happens at the end — but the contrast needs to be stated carefully, because it is often overstated in both directions. A commercial agent is entitled, when its relationship with the principal ends, to a compensatory indemnity in reparation of the loss caused by the termination (Article L 134-12). That indemnity is a matter of public order: it cannot be waived in advance and clauses that reduce it are void. In French practice it is customarily assessed at around two years of the agent's gross commission, and up to three for an exceptionally long relationship — but this is a customary reference point, not an automatic entitlement. The indemnity repairs the loss actually suffered, fixed by the court on the facts, and it must be claimed within one year of the termination or it is forfeited.

A distributor has no equivalent indemnity for the loss of the relationship. Crucially, the Cour de cassation has refused to treat a distribution or concession contract as a common-interest mandate (mandat d'intérêt commun) that would justify a customer-base indemnity, and has likewise rejected the "common-interest contract" characterisation (Cour de cassation, chambre commerciale, 7 October 1997, no. 95-14.158; 30 November 1982, no. 81-11.978). A distributor that builds a substantial customer base for the supplier's products acquires no statutory right to be compensated for losing it when the contract ends.

What the distributor does have is protection against an abrupt termination. The abrupt ending of an established commercial relationship is a civil wrong under Article L 442-1 of the Commercial Code: a party that ends the relationship must give a notice period commensurate with the relationship's duration and importance — which, for a long-standing distributor, can be considerable — failing which it owes damages. Those damages repair the harm caused by the brutality of the rupture, not the loss flowing from the termination itself (Cour de cassation, chambre commerciale, 7 June 1988), and they are typically measured on the distributor's gross margin over the missing notice period, because the distributor's overheads keep running once it is suddenly deprived of the right to sell (Cour d'appel d'Amiens, 15 February 1977). Where the termination is not merely abrupt but abusive — designed to evict the distributor and capture the network it built, or otherwise disloyal — damages for the abuse can be added to those for insufficient notice (Cour d'appel de Versailles, 3 May 1990).

The comparison, properly drawn, is therefore this. The agent is structurally the better protected on exit: it has a non-waivable indemnity for the loss of the relationship itself, benchmarked at around two years' commission. The distributor has no indemnity for that loss — only a right to a notice period, sometimes a long one, and damages if the rupture is abrupt or abusive. A well-established distributor can obtain a substantial sum through the abrupt-termination route, so the difference is not that one is protected and the other is not; it is that the agent is compensated for the loss of the business connection, while the distributor is compensated only for being cut off without fair warning.

Competition law treats an agent and a distributor differently

The two models are also treated differently under competition law, and this is a genuine advantage of the agency model. As a rule, the prohibition on anticompetitive agreements does not apply to agency contracts, because the agent is not regarded as an independent undertaking — it acts for and at the risk of the principal. Only certain clauses can bring an agency within the prohibition: single-branding (monomarquisme) obligations, post-contract non-competition clauses, and situations of collusion, together with clauses delimiting the scope of the agent's activity, which are valid only if they are proportionate (Cour d'appel de Colmar, 22 November 2023).

A distributor, by contrast, is an independent undertaking that buys and resells on its own account, so its agreements with the supplier are fully subject to competition law and to the rules on vertical restraints. A supplier that wants tight control over territory, customers and the terms of sale can achieve more of it through a genuine agency than through distribution, precisely because the genuine agency sits largely outside the reach of the prohibition — provided the agent really does act for the principal's account and carries none of the risk.

That proviso is the crux, and it links back to the risk analysis. The competition-law shelter depends on the agent not being an independent undertaking, which in turn depends on the agent not bearing the financial and commercial risk of the transactions. The more risk a supplier loads onto its "agent" — a broad del credere, an obligation to hold and finance stock, a requirement to bear the cost of unsold goods — the closer the intermediary moves to the position of a distributor, and the weaker the argument that the arrangement escapes the prohibition. The del credere in particular has been analysed for its effect in competition law, not only as a payment guarantee. Keeping the competition-law advantage of agency therefore means keeping the agent genuinely free of transaction risk, which is the same discipline that keeps the relationship an agency in the first place.

Constraints that bind a distributor but not a commercial agent

Because the distributor is an independent reseller, a body of distribution-specific rules governs how a supplier may organise and control it — rules that have no counterpart in the appointment of an agent. A supplier weighing the two models should factor these in, because they shape what it can and cannot require of a distributor.

Selective distribution: only on objective criteria

A supplier that wants to sell only through approved resellers — a selective distribution network — may lawfully select them only on criteria that are objective and qualitative in nature, fixed uniformly for all potential resellers, applied without discrimination, justified by the properties of the products (so that a network is necessary to preserve their quality and proper use), and no more restrictive than necessary (Cour de cassation, chambre commerciale, 18 December 2012, no. 11-27.342; Court of Justice of the EU, Coty, 6 December 2017, Case C-230/16). None of this applies to appointing a commercial agent, whom the principal chooses freely.

Active and passive sales

Distribution is governed by the distinction between active and passive selling, a concept foreign to agency. An exclusive distributor is protected against active selling into its territory by other distributors — organising promotions or targeting customers there — but not against passive sales, and adapting the way products are sold to the internet is not, in itself, an active sale into another's territory (Cour d'appel de Lyon, 12 November 2019; Cour d'appel de Paris, 30 August 2019). These active/passive rules police the relationships between distributors in a network; they have no equivalent for an agent, who sells in the principal's name and does not resell at all.

Exclusivity of distribution and of purchase

Exclusivity operates under stricter constraints for a distributor. A territorial distribution exclusivity must be expressly stipulated, because the courts construe its existence strictly (Cour de cassation, chambre commerciale, 19 November 2002). More importantly, a purchase exclusivity — where a buyer undertakes not to source similar or complementary goods from any other supplier — is capped by statute at ten years (Article L 330-1); a longer term is reduced to ten years. No such statutory ceiling constrains an agent's duty not to represent a competitor during the contract, which flows instead from the agent's loyalty obligation.

Pre-contractual disclosure

Where a supplier requires a distributor to commit to exclusivity and makes its name, trade mark or sign available to it, the supplier must give the distributor sincere information at least twenty days before the contract is signed, so that the distributor commits with full knowledge (Article L 330-3). This pre-contractual disclosure duty — central to franchise and exclusive-distribution networks — has no equivalent in the appointment of a commercial agent. A supplier moving from an agency to a distribution or franchise model takes on this obligation, and the sanctions that attach to getting it wrong.

Commercial agent or distributor: which should you use?

The choice turns on four questions, and the answers usually point clearly to one model.

Frequently asked questions about commercial agent vs distributor

What is the difference between a commercial agent and a distributor in France?

A commercial agent negotiates and possibly concludes contracts in the supplier's name for a commission, and never owns the goods. A distributor buys the products and resells them on its own account, at its own risk, keeping the margin. The agent acts for another; the distributor trades in its own name.

Does a distributor get a termination indemnity like a commercial agent?

No. Only the commercial agent is entitled to the statutory indemnity for the loss of the relationship under Article L 134-12; the courts have refused to treat a distribution or concession contract as a common-interest mandate carrying a customer-base indemnity (Cour de cassation, chambre commerciale, 7 October 1997). A distributor's protection is instead a notice period under the abrupt-termination rule (Article L 442-1) and damages if the rupture is abrupt or abusive — which can be substantial for a long relationship, but is not an indemnity for the loss of the business itself.

Can a contract called a "distribution agreement" be treated as a commercial agency?

Yes. Commercial-agent status depends on how the activity is actually carried out, not on the label. A "distributor" that in fact negotiates sales in the supplier's name can be requalified as a commercial agent — with the indemnity that follows. Conversely, an "agent" that buys and resells is treated as distribution.

Which is better for controlling price and customers — an agent or a distributor?

An agent, generally. Because the agent sells in the supplier's name, the supplier keeps the customer contract and sets the terms of sale. A distributor resells on its own account and controls its own resale relationships.

Is a commercial agent liable if a customer does not pay?

Not unless it has given a del credere guarantee, usually for extra remuneration, in which case its liability is generally limited to part of the unpaid sums. A distributor, owning the goods and selling on its own account, always carries the credit risk itself.

Why does competition law matter in choosing between an agent and a distributor?

A genuine agency largely falls outside the prohibition on anticompetitive agreements, because the agent is not an independent undertaking. A distributor is an independent undertaking, so its agreements are fully subject to competition law and the rules on vertical restraints.

Key takeaways

How our French lawyers help you choose between an agent and a distributor

This article is for general information only. It does not constitute legal advice. The choice between an agent and a distributor, and the characterisation of an existing relationship, are highly fact-specific. Contact our French lawyers for qualified advice before appointing an intermediary or relying on the label of an existing contract.