How do I check which tire brands a shop is locked into by its distributor?
Ask for every distributor agreement and read for exclusivity, minimum purchase promises, and any clause about a change of owner. Then compare what the shop actually stocks against what the paperwork requires. The gaps show where the shop is bound and where it is only used to buying.
Start with the paper. Ask the seller for each agreement with a tire distributor, plus any rebate or programme letters. Look for words like exclusive, preferred, minimum volume and term. Note who can end the arrangement and on what notice, because a tied supplier who can walk away is a different thing from a tie you can negotiate.
Then compare paper with practice. Walk the racks and check recent purchase orders. If the shop carries brands from three suppliers while the contract names one, ask how that works and whether anyone has complained. A habit is easier to change than an obligation.
Last, ask what happens at a sale. Some agreements pass to a buyer, some need the distributor’s consent, and some end. Speak to the distributor, with the seller’s agreement, before you commit. If your plan includes adding a brand or leaving a supplier, make sure the terms allow it. Have your lawyer read anything that restricts what you may stock. Also ask whether any brand supports the shop with training, signage or co-op advertising that would disappear if you changed course. Those perks are easy to overlook and they affect how free you really are to choose.
Key takeaways
- Read for exclusivity, minimums and what happens at a change of owner.
- Compare purchase orders with what the contract says the shop must buy.
- Talk to the distributor before you commit to the purchase.
Related reading
15 pages on the same subject, grouped by topic.
Buying
- Expert answerWhat happens to a tire shop’s distributor programs and pre-season orders when it is sold?
- Expert answerDo film and coating brand dealer agreements transfer when I buy a tint or detailing shop?
- Expert answerHow can I check a butcher shop’s sales against its meat purchases?
- Expert answerHow do I check how much a yarn shop depends on its knitting circle regulars?
- Expert answerHow does a boat repair shop make its money?
- Expert answerHow does a butcher shop hold its customers against supermarkets?
- Expert answerShould a formal wear shop own its rental tuxedos or use a wholesale rental supplier?
- Expert answerWhat does a woodworking shop’s lumber supplier mix say about its stability?
- Expert answerWhat should I check when buying an auto repair shop directly from its owner?
- Expert answerHow do I check how many shredding clients are on locked-bin contracts?
- Expert answerHow do I review a tire shop’s relationships with its wholesale tire distributors?
- Expert answerHow do I check how a tire shop manages its spring and fall appointment rush?
Due diligence
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 03Business Development Bank of CanadaGovernmentHow to diversify your supply chain
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.