What should I learn about a food distributor’s relationship with its top three producers?

Begin with the paperwork. Ask for the agreements, price lists and any exclusivity or territory arrangements with each of the largest producers. Where nothing is written, ask the owner to describe the arrangement and confirm it with the producer later in the process. Your lawyer should read anything that restricts who the distributor may sell to, or that ends on a change of ownership.

Then look at the relationship itself. How long has it run? Who handles it day to day? Has the producer ever changed terms, reduced allocation or started selling direct to larger customers? Ask for payment history and any disputes. Ask whether any producer has asked for a deposit or shortened payment terms. Producers talk, so a quiet inquiry through the seller can say a lot.

Consider the dependency. If one producer’s products make up a large part of sales, losing it is a different risk than losing a minor line. Ask what alternatives exist, and whether the distributor has tried them. Recall notices and quality issues from a producer also affect your customers, so ask how they were communicated and handled. Ask how producers handle shortages and allocation in tight weeks.

Key takeaways

• Get the written agreements with each leading producer, and note what is only understood.
• Ask who holds each relationship and whether a new owner needs the producer’s consent.
• Measure how much of sales rests on each producer’s products.