Creating your own business through the various business alternatives in Spain will be your new goal before the end of 2022. If you want to learn about other ways of operating in Spain, today we will tell you about distribution, agency, commission and franchise contracts. Are you interested? Find out what each of them consists of below!
Business alternatives in Spain
At present, we can find other business alternatives in Spain that do not require the need to incorporate companies or establish a physical operations center. The main ones are:
Distribution contracts
When we talk about distribution contracts, we refer to an agreement between a supplier and a distributor, in which the main objective is the acquisition of products for subsequent resale by the other party to the contract.
In this sense, distributors are considered legal entities that allow carrying out commercial operations of a company, without belonging to it, and that are linked by a common purpose, such as the increase of sales.
Likewise, the distributor can decide the price and conditions for commercialization. However, it assumes the risk of resale of the products and services, and if nothing is agreed upon, it will be responsible for the lack of sale.
As business alternatives in Spain, in the case of distribution contracts, these are characterized by the following characteristics:
Being contracts of a commercial nature
Both distributor and supplier shall act in their own name and for their own account.
They are limited to a specific geographic area
In some cases there is an exclusivity obligation
Classification of distribution contracts
Now, if you are thinking of operating through this modality, you should know that distribution contracts involve three main categories to be taken into account:
Commercial concession or exclusive distribution
As its name indicates, it refers to an exclusive supplier, which means that the supplier undertakes not to deliver its products to more than one distributor in a given territory, and not to sell the product in question in the territory of the selected distributor.
Single distribution agreement
This type of agreement is quite similar to exclusive distribution. However, in these cases the supplier reserves the right to supply the products of the agreement to users in the territory to be agreed.
Authorized distribution contract in the selective distribution system
It involves special treatment on certain types of products, whereby it refers to selective distribution in which distributors are carefully selected for their ability to market complete products or to contribute to the maintenance of a brand’s reputation.
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Agency contracts
According to Law 12/1992, another business alternative in Spain is the agency contract. But, do you know what they are? It refers to a natural or legal person who fulfills the role of agent.
In this sense, the regulations indicate that it is obliged to promote commercial acts or operations on behalf of others, or to promote and conclude them on behalf of and in the name of others. It is like an independent intermediary that does not assume the risk involved in the operations involved.
In addition, agents act as independent intermediaries, so they carry out operations in the name and on behalf of one or more entrepreneurs. Not to mention that, it will be their responsibility to negotiate, conclude agreements or commercial operations that they are in charge of on behalf of the entrepreneur to be represented.
Obligations of the agent vs. obligations of the company
Within the commercial relationship between the agent and the company, certain obligations are stipulated to be fulfilled by both parties. In the following scheme we show you the most common ones:
Commission contracts
This type of contract involves two traders: the principal and the commission agent. It is understood that the principal will be the one who commissions the commission agent to carry out commercial transactions on his behalf. In addition, the commission agent may act in two ways:
In its own name, acquiring the rights against the contracting third parties and vice versa.
On behalf of the principal, who will acquire the rights against third parties and vice versa.
On the other hand, commission contracts are characterized as contracts of a commercial nature that do not cover a specific geographical area. In addition, they are not subject to exclusivity and both the principal and the commission agent may act in their own name and on their own account.
Obligations of the commission agent
In general terms, the commission agent will be responsible for:
To look after the interests of the principal as if they were its own and, if authorized, to designate functions
To be up to date with the accounts of the amounts received in commission and to reiterate the surplus.
You will have to return unsold goods (if applicable).
He is forbidden to buy for himself or for another what he has been assigned to sell, unless authorized by the principal.
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Franchise agreements
In this case, we are talking about the presence of a franchisor and a franchisee, where the right to use a trademark is assigned.
Franchises are systems for marketing products or services, which are governed by a close and continuous collaboration between independent companies, i.e. the franchisor and the franchisee.
Classification of franchise contracts
Production franchise
It involves one of the business alternatives in Spain that focuses on manufacturing products, complying with the regulations established by the franchisor to be sold under its own brand.
Distribution franchise
As the name implies, it refers to a franchise that seeks to distribute and sell the franchisor’s branded products in a store that carries the franchisor’s brand.
Service franchise
In this case, services are offered under the franchisee’s trade name and brand following the regulations stipulated by the franchisee.
Mixed franchise
Mixed franchises are nothing more than a mixture of two types of franchises, whereby two contracts, for example production and services, are merged to meet the needs of the market.
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We hope that now that you know new ways to operate your business in the Spanish territory, you will be encouraged to take advantage of the great opportunities that Spain offers you to grow in the business world. If you are thinking of starting a new business, do not hesitate to contact our advisors, who will clarify all your doubts and offer you the most complete advice. Contact us through our email tasconsultoria@tas-sl.es.
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