Does a water treatment dealer’s manufacturer agreement transfer when the business is sold?

Many softener and filtration dealers sell under a manufacturer’s brand. The right to sell it, the territory, the pricing tier and sometimes the training come from a dealer agreement. When the business changes hands, that agreement is a key document in the deal. Raise it early, and do not assume it will follow the business.

Read the agreement first

Seller and buyer should both read it: the term, renewal, termination, territory, minimum purchases, and any clause about change of ownership or assignment. Some agreements require written consent. Others let the manufacturer end the relationship on notice. Your lawyer can explain what each clause means for your deal and what it would take to keep it.

Ask the manufacturer, with permission

The seller usually makes the first approach, once confidentiality is in place. Ask whether the manufacturer will approve a new owner, what it wants to see about the buyer, whether pricing and territory stay as they are, and whether any training or standards apply. Get the answers in writing where you can.

Plan for the other outcomes

If the manufacturer says no, or offers different terms, the buyer and seller will need to talk to their lawyers about what that means for the deal. Our page on the licences that transfer when you buy a business covers a related question. Raising the agreement early, whether you are the seller or the buyer, leaves time to find another way forward if the manufacturer says no or asks for new terms.