A European skincare company – which will remain unnamed at this time due to case confidentiality – that manufactured high-end skin moisturizing products wanted to enter the American market. It signed a contract that was an exclusive distribution deal with a distributor headquartered in New York – also with its company name withheld for confidentiality reasons – to introduce the skincare products to the U.S. market. Problem was, both nameless companies had quite different views on how that should occur.
Even though it manufactured unknown (but we believe high-end, luxe) products, the skincare company was relatively small, and lacked real experience with United States markets. It could be argued that it did not have any way of fully understanding the nuances of the contract deal. Not only did the skincare company get stuck with the distributor for the next four years, but the distributor did not even intend on representing the product to the skincare company’s wishes. Rather than introducing the product to the market with the skincare company’s name on it, the American-based distributor had plans to slap the label of large, nationwide retailers on the products, effectively stripping the European manufacturer of any brand identity and way to establish itself for growth and future product introductions. The U.S. Distributer also had a deal to have it sold as a cut-rate product to compete with lower-tiered players in the market; obviously a short-term plan that disregarded any long-term, lasting establishment for the European manufacturer in the U.S. markets.
Needless to say, this plan was not the one the skincare company envisioned would elevate its product to the international level, or even represent it well. Feeling stuck in the contract with the distributor, the skincare company was referred through a mutual acquaintance to MKT Law to see what could be done. The heart of the American dream is finding opportunity in our country, and this contract seemed to go directly against that ideal. We knew we had to do something for our client, and fast, before the distributer moved forward and introduced the product in this manner, which would have permanent effects on the European manufacturer’s image in this new market.
We are proud to say we were able to quickly negotiate a successful termination of the agreement – and for a price that was significantly under what the skincare company expected to pay. We managed to prevent the product’s U.S. market launch, stopping it from being rebranded as an unnoticeable product with another company’s label on it and forever branded with the reputation as a “generic” manufacturer of products geared for mass consumption at the lowest price point possible. The European manufacturer was pleased to be able to preserve its brand identity, get out of the rotten, ill-suited deal, and free to team up with another American-based distribution company that would be more suitable for its intended marketing and retailing plans.
Are you worried about a bad deal you have or worried about a contract that’s not being honored? We may be able to help! To get professional assistance with a business law case of your own, you can contact MKT Law. During an initial case review, our Minneapolis business litigation attorney can determine what should be your next move.