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Representation, Distribution and Agency in Honduras, unknown juridical figures for some. In order to talk about distribution matters in Honduras we must go back to the 70’s, period when came into force the Law of Representatives, Distributors and Agents of National and Foreign Companies. This normative regulates the relations between Grantor, that in practical terms is the company or natural person that owns a product, and Concessionaire, which is the distributor of the grantor’s products.

Although there is a normative that regulates the distribution relationships in our country, a vast amount of merchants do not know the benefits that this law grants, reason for which through these lines we will try to get you to know the aspects we should take at the moment of subscribing a distribution contract in Honduras.

In order to be a distributor it is necessary that in the company prevail a clearly Honduran investment, in a proportion not less than the fifty one percent (51%) and once started the relationship it preferably should initiate with a contract, that could be or not exclusive, the concessionaire will have the possibility to request before the Secretary of Economic Development, specifically in the Division of Productive Sectors, an authorized  distributor license in Honduras for the distribution of products of a determined national or foreign grantor.

The importance of having a distributor license of a national or foreign grantor lies is that with it the concessionaire or distributor can request the protection of Law of Representatives, Distributors and Agents of National and Foreign Companies protection, that incidentally, procures in a large way for the distributors interests, on who is guaranteed to perform a safe investment in sales force, marketing and stocktaking, without having to worry about the negative renewal or contracts finishing with just cause from the grantor, only if the distributor complies with his acquire contractually obligations.

The guarantees to which we have made reference consists in the grantors’ obligation to indemnify the distributor for refusing to renew or finishing a contract without just cause, according to the established procedures of the law, in other words, that to the eventual non-compliance from the grantor the law is tough and protects the distributors’ interests.

But not everything is for the distributors protection, since with the entry of the Free Trade Agreement between United States of America, Central America and Dominican Republic (DR –CAFTA), some of the articles of the Law of Representatives, Distributors and Agents of National and Foreign Companies, ARE NOT APPLICABLE, as for example the Article 14, that establishes the indemnities in favor of the distributor, that undoubtedly leaves an open door for the investors of the subscripted countries of the CAFTA to come to Honduras and promote their products through the distributors without the fear that it would be applied to them articles of the law that in the future may prejudice them.

In conclusion, the distribution in Honduras is figure that has been used for decades in the domestic commerce. Nevertheless, for the ignorance of the applicable regulations both grantors and concessionaires in many occasions have suffered economic and image prejudices that could perfectly be avoided with the timely legal advice of an attorney specialist in this matter.

Ricardo Duarte Jiménez
Partner
García & Bodán
Honduras