What Does Country Exclusivity Mean for Your Sauna Dealership?

Country exclusivity means a manufacturer appoints you as its only dealer for a product line in your country, does not appoint anyone else there, and stops its other dealers from actively marketing into your territory. What it cannot do, in the EU, is stop a customer from your country buying from another dealer on their own initiative. Exclusivity protects your patch from competitors chasing your customers; it does not build a wall around your market.

That distinction matters more than any other line in the agreement, so it is worth understanding before you sign.

What exclusivity actually protects

A good exclusive arrangement gives you three things.

No second dealer in your territory. The manufacturer agrees not to appoint another dealer for the same line in your country, and usually not to sell directly to customers there either. This is the part most dealers think of first.

No active selling into your territory by other dealers. The manufacturer can contractually stop its dealers in other countries from targeting your customers: advertising aimed at your country, a website in your language built to win your market, emails sent to your local prospects, or attending your national trade show to sell.

Room to invest. A showroom display unit, local advertising and installation crews only make sense if the customers you win stay yours. Exclusivity is what makes that investment rational.

What it cannot protect: passive sales

EU competition law separates active sales, where a seller reaches out to a customer, from passive sales, where the customer finds the seller and asks to buy. Under the EU's Vertical Block Exemption Regulation (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022R0720), a supplier can restrict other dealers' active sales into a territory it has given you, but restricting passive sales is treated as a hardcore restriction. Preventing a dealer from making effective use of the internet to sell is also hardcore.

In practice, if a German homeowner finds a Dutch dealer's ordinary website and orders from there, that sale is allowed, and no clause in your agreement can lawfully prevent it. Do not pay for exclusivity on the assumption that it will.

A few other points from the same regulation are useful to know:

The protection applies only while the manufacturer's and the dealer's market shares each stay at or below 30 percent, which is rarely an issue in a niche like outdoor saunas.

A supplier may allocate one territory to up to five exclusive distributors. So "exclusive" in a contract does not automatically mean "only one"; read how many.

A supplier may ask other dealers to pass the active-sales restriction on to their own trade customers, which closes an obvious loophole.

A manufacturer cannot set your minimum resale price. It can recommend one.

A non-compete obligation (a ban on selling rival brands) lasting longer than five years falls outside the exemption.

The UK has its own equivalent order since leaving the EU, broadly similar but different in detail. None of this is legal advice; have a lawyer in your country read the agreement.

Questions to settle before you sign

Which products? Exclusivity is usually granted per product line, not for a whole brand. Check exactly which models and any future models are included.

Which territory? A whole country, a region, or a named list of postcodes. Be clear about islands, border areas and online sales directed at your country.

What keeps it? Most manufacturers tie exclusivity to an agreed yearly volume. Ask what happens if you miss it in a bad year: a review, a reduction to non-exclusive, or termination.

What about project and hotel sales? Large commercial buyers sometimes go directly to the factory. Agree whether those count as your sales.

Can you sell other brands? If there is a non-compete clause, know its length and scope.

What happens at the end? Notice periods, remaining stock and display units should all be written down.

Liability is a separate question from exclusivity. My business partner Giedrius Patlaba has explained why a dealer's legal liability to customers can outlast the factory warranty here: https://www.pub-lish.com/en/read/8f7e6f6c-321a-4fcb-a43d-66e2c7e88402

How we handle it at Wood Architects

We build cube and barrel saunas in our workshop in Klaipėda, Lithuania. For our Signature cube line we appoint one exclusive partner per country, tied to a realistic yearly volume agreed in writing. Our barrel saunas are sold on open wholesale, so more than one dealer can carry them in the same country. In several countries the cube exclusivity is already taken, so the first conversation is always which line and which territory are genuinely available.

Related questions

Is exclusive distribution legal in the EU? Yes. It is a recognised structure under the Vertical Block Exemption Regulation, provided it avoids hardcore restrictions such as banning passive sales.

Can a manufacturer sell online into my exclusive territory? Only if the agreement allows it; many exclusive agreements reserve the territory fully for the dealer, so negotiate this point.

Does exclusivity cost extra? Usually not as a fee; it is normally earned through a committed volume.

Sources

Commission Regulation (EU) 2022/720 (Vertical Block Exemption Regulation), EUR-Lex: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022R0720