Don’t Drive Away Opportunity: Why Territory Protection Matters in Distribution Deals

I’ve seen it happen too many times: a potential distributor offers to handle marketing and sales for a supplier’s product but walks away when asked for standard protections like territorial exclusivity

Here’s a recent case:

A reseller approached a supplier who had no presence or brand exposure in their market. The reseller offered to build the brand, do the marketing, and drive sales but understood that market investment without territory protection is a losing game.

The reseller asked: “Will you guarantee me a protected territory so I can invest in growth?”

The supplier refused, saying, “Anyone can buy from us.”

The result was that the reseller disengaged, and the opportunity evaporated.

If that supplier now wants to be in that market they have to invest time, money and resources whereas if they had gone with the reseller, they just needed to wait for the orders to come in.

 

Without clear territory or customer protection, resellers:

• Compete against each other as well as the supplier, creating friction and internal conflict
• Lose the motivation to invest time and capital because there’s no assurance of ROI
• Risk undermining the brand, pricing consistency, and strategic focus due to cart-hopping customers
• Unless the reseller is getting a great discount it is hard for them to complete with the supplier

 Research shows that explicit territory agreements boost reseller commitment and marketing performance, while reducing friction and risk.

 

My view

If a distributor is willing to invest in your product, give them the room to breathe. That means:

• Defining territory or segment exclusivity
• Aligning on roles and responsibilities
• Building trust through transparent agreements

You’ll unlock market energy, avoid internal conflict, and create real growth. Letting “anyone buy” may seem open but it actually closes the door on serious partners.

 

I’d love your take:

Have you walked away from distributor deals due to lack of protection?

How do you define and protect territories in your distribution channels?

What guardrails have you found effective for aligning goals and performance?

Let’s unpack this, your insights can help others avoid missing out.