Distribution agreement: exclusivity, non-compete obligations and territory (2026 guide)

Properly calibrated, territorial exclusivity and non-compete obligations strengthen a distribution agreement. Poorly framed, they expose the parties to invalid clauses, fines and costly disputes. Here is the practical 2026 guide to making exclusivity, non-compete obligations and territory legally sound under French and European law.

1) Applicable legal and competition framework in 2026

Three sets of rules apply:

• French distribution-network law (Code de commerce). An exclusive purchasing clause is limited to 10 years (art. L.330‑1 C. com.). The “loi Doubin” pre-contractual disclosure document (DIP) must be delivered at least 20 days before signature or payment of any sum where the agreement establishes a network using a shared trade name or trademark and significant exclusivity (art. L.330‑3 C. com.). Refer to the Code de commerce on Legifrance and the practical guidance on Service‑Public Pro.
• Restrictive-practices law (art. L.442‑1 C. com.): avoid any clause creating a significant imbalance or an abrupt termination of an established commercial relationship. See the Code on Legifrance.
• EU law (Vertical Block Exemption Regulation no. 2022/720 and 2022 Guidelines): the block exemption applies if each party has a market share ≤ 30%, with no hardcore restrictions (e.g. resale price maintenance, prohibition of passive sales), and subject to specific conditions for exclusivity and non-compete obligations. Texts on EUR‑Lex (Regulation 2022/720) and Guidelines 2022/C 248/01.

For a concise overview of exclusive distribution in France, also see Livv.eu and this law-firm briefing on the benefits/risks of exclusivity: LeBouard Avocats. For trademarks, plan licensing and filings with INPI.

2) Define territorial exclusivity without breaching EU rules

Exclusivity vs selectivity vs unrestricted distribution

• Exclusive distribution: one distributor (or a few) is/are exclusively authorized to actively solicit a territory or a customer group. Since 2022, the EU has permitted “shared exclusivity” for the same territory where the level of investment justifies it (VBER 2022/720).
• Selective distribution: a closed network based on qualitative/quantitative selection criteria. Stronger restrictions may target unauthorized resellers (Guidelines 2022/C 248/01).
• Unrestricted distribution: neither exclusivity nor selection.

Active vs passive sales (key online/offline distinction)

• Active sales (targeted): direct solicitation, sales visits, geographically targeted advertising into a protected territory, paid campaigns targeting protected customers, marketplaces specifically targeting that territory.
• Passive sales (untargeted): responding to unsolicited requests, a website without geo-blocking, untargeted organic search visibility. Prohibiting passive sales is a hardcore restriction prohibited by EU law.

In an exclusive distribution system, it is lawful to restrict a distributor’s active sales into a territory or customer group reserved for the supplier or another distributor. However, passive sales must not be prohibited (including most untargeted online sales), otherwise the agreement loses the EU exemption (VBER and the Guidelines cited above, EUR‑Lex).

Useful to know in 2026:

• Shared exclusivity and pass-on obligations: suppliers may require distributors to pass certain restrictions on active sales on to their reseller customers, to protect the reserved territory.
• Online sales: absolute bans on selling online remain prohibited. Proportionate limitations are possible (e.g. quality standards, technical requirements, rules on targeted advertising). Policies on marketplaces must remain proportionate and must not amount to a general ban on online sales (Guidelines 2022/C 248/01).

Duration of exclusivity and renewal

• French law: exclusive purchasing cannot exceed 10 years (art. L.330‑1 C. com. – Legifrance).
• EU law: a non-compete clause during the agreement (exclusive purchasing obligation) generally benefits from the exemption only if its duration is ≤ 5 years (Article 5 VBER 2022/720). Tacit renewal may remain exempt if the distributor retains a genuine ability to switch supplier at the end of 5 years (Guidelines 2022/C 248/01).

3) Non-compete clause: during and after the agreement

During the agreement

• Purpose: limit restrictions on resale of competing products to the contractual products/services and the granted territory. Avoid wording covering “any similar product” outside that scope.
• Duration: aim for ≤ 5 years to remain within the VBER (Article 5). If French law already requires ≤ 10 years (L.330‑1), comply with the stricter limit as applicable.
• Proportionality: justify the non-compete obligation by protecting specific investments (launch, stock, marketing, after-sales service) and know-how.

After the agreement

• Post-term: a post-contractual non-compete obligation may be exempt if it is limited to 1 year, the premises and land where the distributor operated, competing products/services, and is necessary to protect know-how transferred (Article 5(1)(b) VBER 2022/720, EUR‑Lex).
• Non-solicitation: it must remain targeted (e.g. key staff trained by the supplier, customers active within a short period) and proportionate in duration.

4) Sensitive clauses to prohibit or control

• Resale price maintenance (RPM): prohibited as a hardcore restriction. Only recommended resale prices are an option, without pressure or threats (DGCCRF — vertical agreements).
• Blocking passive sales (including geo-blocking, systematic refusal of untargeted online orders): prohibited. Regulate e-commerce quality instead.
• Vague clauses on territory, reserved customers or unrealistic targets: risk of significant imbalance (art. L.442‑1 C. com.).

5) Essential clauses to include (practical template)

Defining territory and channels

• Precise territory (countries, regions, postcodes) and reserved customers (large retail chains, B2B by segment, public procurement).
• Active/passive sales rules: permitted/prohibited under the VBER, with examples (solicitation, ad targeting, marketplaces).

Exclusivity and performance

• Exclusive purchasing limited in time (≤ 5 years for the EU exemption, and in any event ≤ 10 years under French law).
• SMART sales targets, warning mechanisms, recovery plan and partial withdrawal of territory if underperformance persists.

Quality, trademark and IP

• Quality standards (outlets, service, e-commerce), audits, controlled trademark use, license and guidelines. Ensure alignment with your trademark protection strategy through INPI.

Digital channel

• Online sales permitted subject to quality conditions, anti-geoblocking banner, proportionate rules for marketplaces, without an absolute ban.

Competition and data compliance

• Market shares to monitor (≤ 30%), no unjustified sharing of sensitive data in dual distribution (supplier also acting as retailer), in accordance with the 2022 Guidelines (EUR‑Lex).

Exit and disputes

• Notice and clear termination grounds, termination clauses, capped compensation and appropriate contractual remedies.
• Jurisdiction and applicable law: include a robust, compliant jurisdiction clause.

6) Sample clauses (framework to adapt)

Exclusivity — active sales: “The Distributor shall refrain from all active sales into Reserved Territory [X] and Reserved Customer Segment [Y], including solicitation, sales visits, geographically targeted advertising and targeted paid campaigns. Passive sales remain unrestricted.”

Non-compete during the agreement: “During the Commitment Period, limited to [5] years, the Distributor shall refrain from marketing Competing Products [strict definition] in the Territory. The clause is justified by [specific investments] and does not exceed what is necessary.”

Post-term non-compete: “For [12] months following termination, limited to the operating premises and land and to Competing Products, the non-compete obligation is justified by protection of the know-how disclosed.”

7) Quick compliance checklist

• DIP 20 days before signature/payment if a trade name/trademark is used with significant exclusivity (art. L.330‑3; Service‑Public Pro).
• Exclusive purchasing ≤ 10 years (L.330‑1) and non-compete during the agreement ≤ 5 years for the EU exemption (Article 5 VBER 2022/720).
• Market shares ≤ 30 % on each side (VBER 2022/720).
• No hardcore restrictions (RPM, blocking passive sales, unjustified market partitioning).
• Notice and exit arrangements to avoid abrupt termination (art. L.442‑1 C. com.).

8) Disputes and a clean exit

Plan for an orderly exit: notice suited to the duration and volume of the relationship, graduated steps (formal demand, recovery plan, partial termination), and documentation of breaches. When parting ways, follow our guide to terminating a commercial contract, and, if necessary, invoke protection against abrupt termination. Predetermined, proportionate penalties facilitate recovery, as explained in our article on penalty clauses vs withdrawal-fee clauses. To avoid unfavorable forum shopping, settle court jurisdiction.

9) Common mistakes (and fixes)

• Prohibiting online sales instead of regulating digital-channel quality. Fix: e-commerce standards, KPIs, reporting.
• Overly broad non-compete obligations (all “similar” products) that last too long. Fix: strict definition and duration ≤ 5 years (during), 12 months (after) if know-how is involved.
• Vague territory. Fix: precise mapping (postcode/country lists, customer segments).
• Forgetting the DIP when the network involves a trade name. Fix: delivery scheduled 20 days beforehand, complete content (accounts, market overview, list of outlets).

Quick FAQ

• Is the DIP mandatory for all exclusive distribution? No: it is required where there is a network using a shared trade name/trademark and significant obligations (art. L.330‑3; Service‑Public Pro).
• Can I prohibit the distributor from selling online? No absolute ban is allowed. Regulate quality and certain targeted active sales; leave passive sales unrestricted (VBER 2022/720).
• How long can a post-term non-compete last? In principle, a maximum of 12 months, limited to the premises and competing products, if necessary to protect know-how (Article 5 VBER).

Need a rapid audit of your international distribution project, including e-commerce and the EU market? We combine the legal framework with practical tools already presented in our guides (e.g. commercial termination and court jurisdiction).