Distributor vs Agent in France: Direct Sale, Distribution or Commercial Agency

Three ways to sell into France: direct sale, distributor or commercial agent

A foreign business that wants to sell goods in France rarely has to open a French company on day one. In practice there are three principal routes to market, and the distributor vs agent France choice sits at the centre of them. You can sell directly to French customers under your own contract, you can appoint a distributor that buys your goods and resells them on its own account, or you can engage a commercial agent (agent commercial) that finds and negotiates orders in your name. The label the parties put on the arrangement does not decide its regime; French judges look at how the relationship actually works and requalify it if the substance differs from the wording.

The distinction matters because the three routes are governed by different bodies of law. A direct sale is a simple contract of sale, shaped by the parties' general terms and, for cross-border deals, by European choice-of-law rules and the Vienna Convention. A distribution agreement is an unnamed commercial contract, largely a matter of freedom of contract but exposed to the powerful protection against rupture brutale in Article L442-1 of the Commercial Code. A commercial agency is governed by a protective statute (Articles L134-1 and following of the Commercial Code) that gives the agent, among other things, a termination indemnity that the parties cannot contract away in advance.

For a supplier the practical questions are always the same: who owns the customer relationship, who carries the stock and the credit risk, who sets the resale price, and what does it cost to end the arrangement. This article works through each route, compares them on those axes, flags the VAT and permanent-establishment traps, and offers a method for matching a structure to your commercial strategy. It sits alongside our guides to selling into France from abroad and to rupture brutale and established supply relationships.

Route one: the direct cross-border sale

The simplest route is to sell to French customers directly, without an intermediary established in France. You ship from abroad against orders placed under your own general terms and conditions of sale. This keeps the supplier in full control of pricing, product presentation and the customer relationship, and it avoids creating any local structure. It suits suppliers with a limited number of large, identifiable French customers, or an online channel, rather than those needing dense local coverage and after-sales presence.

The legal architecture of a direct sale is that of an ordinary contract of sale. For a cross-border transaction two questions dominate: which law governs, and which court or tribunal hears a dispute. Under the Rome I Regulation the parties may choose the applicable law; absent a choice, a sale of goods is governed by the law of the seller's habitual residence. The United Nations Convention on Contracts for the International Sale of Goods (the Vienna Convention) applies by default to B2B sales between businesses in different contracting states unless the parties exclude it. Well-drafted terms therefore make deliberate choices on governing law, jurisdiction and, for delivery and risk, the applicable Incoterm.

The commercial cost of the direct route is reach. Without a local partner the supplier must handle its own prospecting, invoicing, credit assessment and collection across a foreign market. It also bears the full credit risk on each French buyer. Retention-of-title clauses, compliant B2B payment terms and a clear jurisdiction clause become the supplier's main protections. Where the supplier wants deeper penetration and a partner who carries stock and customers locally, it will move to distribution; where it wants a local sales force without the capital commitment, it will look at agency.

Route two: the distributor who buys and resells

Under a distribution agreement the French partner is an independent trader that buys the goods from the supplier and resells them on its own account, at its own price and to its own customers. The distributor takes title to the stock, carries the inventory and credit risk, and keeps the resale margin as its remuneration. This is a chain of successive sales: the supplier sells to the distributor, and the distributor sells on. There is no statute dedicated to distribution as such; the relationship is built by contract on the general commercial law of sale and, where an acte de commerce is involved, the freedom of evidence and jurisdiction of the commercial court.

Distribution gives the supplier local reach and a partner who invests in stock, marketing and after-sales, while transferring most of the operational and credit risk downstream. In exchange, the supplier gives up direct control. Because the distributor resells on its own account, French and EU competition rules constrain how far the supplier may dictate the terms of resale: fixing a firm resale price is prohibited, though maximum or recommended prices are usually permitted. Territorial exclusivity, supply commitments and non-compete obligations are common but must respect competition-law limits.

The great trap of the distribution route is not the ordinary law of sale but the protection against abrupt termination. Article L442-1 II of the Commercial Code makes a party liable for suddenly ending, even partly, an established commercial relationship without giving written notice proportionate to its duration. This applies to supply and distribution relationships independently of any breach, and the required notice can run to many months; the 2019 reform introduced an eighteen-month cap as a safe harbour. A foreign supplier that simply stops ordering from, or supplying, a long-standing French distributor can face a damages claim measured on the lost margin over the notice that should have been given — quite separate from any statutory indemnity. Our note on rupture brutale and established supply relationships develops this point.

Route three: the commercial agent and the statutory indemnity

A commercial agent (agent commercial) is an independent intermediary who, on a permanent basis, negotiates and sometimes concludes contracts of sale in the name and on behalf of the principal. Unlike a distributor, the agent never buys the goods and never takes the resale margin; it is paid commission on the business it brings in. The customers belong to the principal, not the agent. Because the agent acts in the supplier's name, the supplier keeps far more control over pricing and terms than under distribution — resale-price rules do not bite in the same way, since it is the principal who sells.

Commercial agency is governed by a protective statute, Articles L134-1 and following of the Commercial Code, which transposes an EU directive and cannot be waived to the agent's detriment. Article L134-1 defines the agent; the statute imposes duties of good faith and information on both sides, regulates commission, and — most importantly for a foreign principal — gives the agent a termination indemnity. Under Article L134-12, when the principal ends the mandate the agent is entitled to compensation for the loss suffered, provided it claims within one year. French courts customarily set this indemnity at around two years of gross commission, calculated on a recent average. The right is of public policy: a clause excluding or capping it in advance is ineffective.

The indemnity is not payable in every case. It is lost where the principal terminates for the agent's serious fault (faute grave), where the agent itself terminates without justification, or where the agent assigns the agency contract to a third party. But the default position is that ending an agency costs the principal roughly two years' commission, which makes the agent the most expensive route to exit even though it needs the least capital to run. Note also that the protection follows the substance, not the label: a partner called a distributor may be requalified as a commercial agent — and gain the indemnity — if in reality it negotiates in the supplier's name; and a partner labelled an agent may fall outside the statute if it in fact resells on its own account.

Comparing control, cost, risk and termination consequences

Set side by side, the three routes trade the same variables against one another: how much control the supplier keeps, how much capital and risk the partner absorbs, and what it costs to bring the relationship to an end. A direct sale gives maximum control and no local exit cost, but the least reach and the whole credit risk. Distribution transfers stock, customers and credit risk to the partner and buys local reach, at the price of reduced control over resale and exposure to rupture brutale. Agency keeps control and the customer base with the supplier and needs little partner capital, but carries the built-in cost of the L134-12 indemnity on exit.

Ownership of the customer relationship is often the decisive factor. Under agency the clientele belongs to the principal, so the supplier can change agents without losing its market — but it pays the indemnity for the privilege of the agent having built that clientele. Under distribution the customers are, in law, the distributor's own; the supplier that ends the relationship may keep the market only if it can move those customers to a new partner or take them in-house, and it must still respect the notice that Article L442-1 requires. This is why the two protections — the agent's indemnity and rupture brutale — are best understood as different answers to the same question: who paid to build the goodwill, and who should be compensated when the relationship ends.

Termination cost should be modelled before signing, not after a dispute. For an agent, the exposure is broadly two years of commission and is largely predictable. For a distributor, the exposure is the margin lost over the notice period that a court would consider proportionate, which turns on the relationship's length, the distributor's economic dependence and how hard it is to reconvert — a less predictable figure, capped at eighteen months' notice. For a direct seller, there is no relationship-based exit cost at all, only the ordinary consequences of breach. A supplier planning its French entry should price each scenario into the decision from the outset.

VAT and permanent-establishment considerations

The choice of route also shapes the supplier's tax and registration footprint in France, and this is often underestimated. A pure direct sale into France may still trigger a French VAT registration obligation depending on how the goods move and who the customer is, but it does not, in itself, create a taxable presence for corporate-tax purposes. The supplier remains taxed at home, subject to the ordinary rules on permanent establishments in the applicable double-tax treaty.

A distributor buys and resells on its own account, so it is the distributor — a separate French taxpayer — that accounts for French VAT and corporate tax on its resales. This is generally the cleanest structure for a foreign supplier wanting to avoid a French taxable presence: the supplier makes cross-border sales to the distributor and the local tax consequences sit with the distributor. The supplier should still confirm its own VAT position on the intra-EU or import supply to the distributor.

Commercial agency deserves particular care. Because the agent concludes or habitually negotiates contracts in the principal's name, it can, depending on the treaty and the facts, constitute a dependent agent permanent establishment, attributing part of the supplier's profit to France. An independent agent acting in the ordinary course of its own business is usually excluded, but an agent that works largely for one principal and binds it commercially can cross the line. Any supplier using an agent in France should test the permanent-establishment question against the relevant treaty before signing, because the tax outcome can outweigh the commercial simplicity of the route.

Which structure fits which strategy

There is no universally best route; the right one depends on the supplier's goals for control, capital, speed and exit. As a general orientation, the direct sale suits suppliers with a few large French accounts, a digital channel, or a testing phase where commitment should stay low. Distribution suits products that need local stock, coverage and after-sales, where the supplier is content to hand pricing and customers to a committed partner in exchange for reach and reduced risk. Agency suits suppliers who want a local sales force representing them but wish to keep control of pricing, terms and the customer base.

Two strategic threads should drive the decision. First, how much does the supplier value keeping the customer relationship? If retaining the clientele and controlling how the brand is sold matters, agency or a tightly drafted distribution agreement with data and non-compete protections is preferable. Second, how does the supplier plan to exit or change partners? If it expects to consolidate or switch partners later, it should price the agent's indemnity or the rupture-brutale notice into the plan now, and draft the contract — term, notice, termination grounds, post-termination obligations — to manage that cost rather than discover it in litigation.

Whichever route is chosen, the contract should be written to the substance you actually want, because a French court will requalify a mislabelled arrangement. Calling a partner a distributor will not defeat the agent's indemnity if the partner in reality sells in your name; calling a partner an agent will not import the L134 protections if it truly resells on its own account. The steps below give a practical sequence for placing your French route to market on solid legal footing.

Direct sale vs distributor vs commercial agent: a comparison

The table below summarises the three routes on the axes that matter most to a foreign supplier. It is a starting point for the distributor vs agent France decision, not a substitute for advice on your own figures and treaty position.

Frequently asked questions about distributor vs agent in France

Should I use a distributor or an agent in France?

It depends on control, capital and exit cost. A distributor buys and resells, carries the stock and credit risk and owns the customers, but ending the relationship triggers rupture brutale notice under Article L442-1. An agent sells in your name, keeps little capital tied up and leaves the customers with you, but earns a termination indemnity of roughly two years' commission under Article L134-12. Model both exit costs before deciding.

Does a French commercial agent get an indemnity when I terminate?

Yes. Under Article L134-12 of the Commercial Code a commercial agent is entitled to a termination indemnity when the principal ends the mandate, customarily set by the courts at about two years of gross commission. The right is of public policy and cannot be excluded in advance. It is lost only in defined cases, such as the agent's serious fault, the agent's own unjustified termination, or an assignment of the agency.

Can I sell directly into France without a French entity?

Yes. You can sell to French customers under your own general terms of sale from abroad, with a chosen governing law and jurisdiction. A direct sale does not create a local company and generally does not create a taxable presence, though it may trigger a French VAT registration depending on how the goods move. The trade-off is reach and carrying the full credit risk yourself.

What is the risk of ending a distributor in France?

The main risk is Article L442-1 II, which makes you liable for abruptly ending an established commercial relationship without sufficient written notice. The notice must be proportionate to the relationship's duration and economic weight, subject to an eighteen-month cap introduced in 2019. Damages are measured on the margin the distributor loses over the notice you should have given, independently of any breach.

Who owns the customers — the supplier or the intermediary?

Under a commercial agency the customers belong to the principal, because the agent negotiates in the principal's name. Under a distribution agreement the customers are, in principle, the distributor's own, because it resells on its own account. This is why the agent receives an indemnity and the distributor is protected against abrupt termination — both compensate the party that built the goodwill.

Can a distributor be requalified as a commercial agent?

Yes. French courts look at how the relationship actually operates, not the label. A partner called a distributor may be treated as a commercial agent — and gain the L134-12 indemnity — if in substance it negotiates sales in the supplier's name rather than buying and reselling on its own account. Draft and operate the contract consistently with the route you intend.

Does using an agent create a tax presence in France?

It can. Because a commercial agent concludes or habitually negotiates contracts in the principal's name, it may constitute a dependent-agent permanent establishment under the applicable double-tax treaty, attributing part of your profit to France. An independent agent acting in the ordinary course of its own business is usually excluded. Test the permanent-establishment question against the treaty before appointing an agent.

How our French lawyers help with distributor vs agent structuring in France

Petroff Avocats advises foreign suppliers and their French counterparties on choosing and documenting the right route to market. We model the control, tax and exit consequences of a direct sale, a distribution agreement and a commercial agency, then draft the contract — governing law, exclusivity, resale-price and non-compete terms, notice and termination — to fit the route and stay within competition-law limits. On the other side, we act for French distributors and agents enforcing their rights to notice under Article L442-1 or to the indemnity under Article L134-12, and we handle the disputes that arise when a relationship ends.

This article is for general information only. It does not constitute legal advice and cannot replace advice tailored to your circumstances. The law and its application evolve, and the right route to the French market depends on your figures, your goods and the applicable double-tax treaty. Contact our French lawyers for advice on your situation.