To become a distributor in Australia, you need three things: a supplier willing to appoint you, a registered business (usually a company with an ABN), and a written distribution agreement that sets out your territory, pricing and exit terms. There’s no single “distributor licence”. The products you carry decide which licences, if any, you’ll need.
Here’s the catch. Most people spend weeks chasing a supplier and about ten minutes reading the contract that supplier sends over. That’s backwards. The pitch gets you in the door, but the agreement decides whether you’re building a business or renting one that can be taken away.
- There’s no general distributor licence in Australia. Food, medicines, alcohol, tobacco, chemicals and electrical goods each carry their own licensing or registration rules.
- Your distribution agreement matters more than your pitch. Term, territory, minimum purchase targets and exit terms decide whether the business is worth building.
- A supplier can’t force a minimum resale price on you. It can recommend an RRP, but enforcing a price floor is resale price maintenance, which the Competition and Consumer Act prohibits.
- Distribution runs on cash before profit. You pay for stock and freight up front, then wait 30 days or more for retailers to pay you.
- Most distributors trade through a company. Suppliers and lenders expect it, and it keeps stock and debt risk away from your personal assets.
What does a distributor actually do?
A distributor buys products from a manufacturer or brand owner, holds the stock, and resells it to retailers, trade buyers or sometimes consumers. You take ownership of the goods. That single fact separates a distributor from an agent, who sells on the brand’s behalf for a commission and never owns the stock.
Owning the stock means you carry the risk. If it doesn’t sell, expires or gets damaged in transit, that’s your loss. In return, you set your own sell price and keep the margin.
Good distributors do more than move boxes. Brands appoint them for local market knowledge, retailer relationships, warehousing, marketing support and after-sales service. The more of that you can offer, the better the terms you’ll negotiate.
How do distributors make money?
Mostly through the gap between what you pay the supplier and what you charge your customers. Say you buy a carton for $60 and sell it to a retailer for $80. Your gross profit is $20.
Now watch the maths. That $20 is a 33% markup on cost but only a 25% margin on the sell price. New distributors mix these up all the time, then wonder why the bank balance looks thinner than the spreadsheet promised.
Take $4 of inbound freight per carton out of that $20. Offer the retailer a 2% early-payment discount. Add storage. Your real margin can drop by a third before you’ve paid yourself.
Beyond margin, distributors earn from volume rebates paid by the supplier, co-op marketing funds, delivery and logistics fees, and sometimes installation or servicing. Rebates are worth chasing. They’re also the first thing suppliers cut when sales dip, so don’t build your break-even around them.
Distributor, wholesaler, reseller, agent or stockist: which one are you?
These labels get used loosely, and suppliers use them loosely in contracts too. What actually matters is who owns the stock, whether you have exclusivity, and what obligations come with it.
| Role | Owns the stock? | Relationship with the brand | Usual contract |
|---|---|---|---|
| Distributor | Yes | Formal appointment, often with a territory and targets | Distribution agreement |
| Wholesaler | Yes | Buys in bulk, sells on volume, few brand obligations | Supply terms or terms of trade |
| Reseller | Yes | Permission to resell, sometimes with value-added services | Reseller agreement |
| Agent | No | Sells on the brand’s behalf and earns a commission | Agency agreement |
| Stockist | Yes | A retailer that carries the brand for end customers | Wholesale account or stockist terms |
If you’re searching “how to become a stockist of a product”, you’re asking a retail question. Stockists open a wholesale account with a brand or its distributor. Becoming a distributor is a bigger commitment: you sit between the brand and those stockists.
Some businesses start as resellers under a reseller agreement template and graduate to full distribution once they’ve proven they can move volume. That’s a sensible path. It lets both sides test the relationship before anyone commits to exclusivity.
Which distribution model should you choose?
The model is a decision about control versus reach. Suppliers pick one based on their product, and your leverage depends on which one they want.
Exclusive distribution
You’re the only distributor for the product in a defined territory or channel. A European medical device maker appointing one national distributor for Australia is the classic example.
Exclusivity sounds like the prize. It comes with a bill: minimum purchase targets, marketing commitments and reporting. The smart move is negotiating what happens if you miss a target. Losing exclusivity (dropping to non-exclusive) is survivable. Immediate termination isn’t.
Selective distribution
The supplier appoints a handful of distributors, each covering a region, channel or customer type. You see this in electronics, premium beauty and specialty food. A Queensland food distributor might service independent grocers while another handles hospitality accounts.
Where this goes wrong is channel overlap. If the lines between your patch and a rival’s patch aren’t drawn precisely in writing, expect arguments over the first big account that sits on the border.
Intensive distribution
The product goes everywhere it can. Snacks, drinks and cleaning products run on this model, with multiple distributors and wholesalers supplying thousands of outlets. Volume beats exclusivity, margins are thin, and your edge comes from logistics efficiency and retailer relationships.
Get a free legal document when you sign up to Lawpath
B2B or B2C?
Most distributors sell business to business: to retailers, trades, cafes, clinics. A plumbing supplies distributor selling to hardware stores and plumbers is a typical B2B setup.
Selling direct to consumers through your own online store is growing, but check your agreement first. Plenty of suppliers ban it outright to protect their retail partners. And once you sell to consumers, the consumer guarantees under the Australian Consumer Law land squarely on you.
How do you become a distributor in Australia, step by step?
Eight steps, roughly in this order. Some run in parallel. None of them are optional.
1. Pick a product you can actually sell
Start with what you know. People who become a distributor in an industry they’ve worked in have a head start: they already know the buyers, the seasonality and the price points.
Test demand before you commit. Ring ten retailers in your target channel and ask whether they’d range the product, at what price, and what they’d need from you. Ten honest conversations beat a month of desk research.
2. Run the numbers on landed cost and cash flow
Your real cost is the landed cost: everything it takes to get a unit onto your shelf. For imported goods, that looks something like this.
| Cost item | What to allow for |
|---|---|
| Supplier price | Per unit, in the supplier’s currency, so budget for exchange-rate swings |
| International freight and insurance | Per shipment, then spread across units |
| Customs duty | Many goods attract 0% or 5%; free trade agreements can reduce it |
| GST on importation | 10% of the customs value plus duty, freight and insurance |
| Customs broker and port charges | Per shipment, and higher than most people expect |
| Local freight and warehousing | Per pallet or per month, plus pick-and-pack fees |
Then map the cash cycle. You’ll pay the supplier on order or on shipment. Stock sits on the water for weeks. Retailers pay you 30 to 60 days after delivery. That gap is your working capital requirement, and it’s the number that sinks more new distributors than bad products do.
3. Choose your business structure
You can start as a sole trader, but most distributors don’t stay one for long. You’re signing supply contracts, carrying stock, extending credit and holding product liability risk. As a sole trader, every one of those sits on your personal balance sheet.
A company gives you limited liability and tends to make suppliers more comfortable appointing you. Expect them to ask for a director’s guarantee anyway, at least early on. If you’re weighing it up, the business structure quiz is a quick way to see which setup fits, and you can register a company online in one sitting once you’ve decided.
4. Register your ABN and GST
You’ll need an Australian Business Number (ABN) before any supplier will open an account for you. If you trade under anything other than your own name or your company’s exact name, register a business name too.
GST registration becomes compulsory at $75,000 in annual turnover. Distributors hit that fast, so most register from day one. There’s a practical reason too: you pay GST on stock and imports, and you can only claim it back once you’re registered.
Importing regularly? Ask your accountant about the ATO’s deferred GST scheme. It lets eligible importers push the GST on imports to their BAS instead of paying it at the border, which can free up a meaningful chunk of cash.
5. Approach suppliers with a real plan
Suppliers get “can I be your distributor?” emails every week. The ones they answer come with a one-page plan: which channels you’ll sell into, which retailers you already know, your first-year volume estimate, and how you’ll handle warehousing and marketing.
Ask for a trial period or a non-exclusive start if they’re hesitant. It lowers the risk for them and gives you data to negotiate exclusivity later.
6. Negotiate and sign a written distribution agreement
Never distribute on a handshake. The next section covers what the agreement needs to say, because this is the step that decides whether everything else pays off.
7. Check the licences your products need
Do this before you sign, not after. Discovering your product needs a state licence or a regulator registration after the first container lands is an expensive way to learn. The licensing section below has a product-by-product table.
8. Set up your terms of trade, credit controls and insurance
Your customers need to sign your terms, not the other way round. Solid terms of trade cover ordering, delivery, when risk passes, payment terms, late fees, returns and, critically, retention of title.
A retention of title clause says the goods stay yours until the customer pays. On its own, it’s close to useless if the customer goes broke. You also need to register your interest on the PPSR, and for stock, that registration has to be in place before the customer takes possession. Miss that window and you rank behind the bank.
Round it out with the right business insurance: product liability, public liability and transit cover at a minimum. Product liability matters more than people think. If you import the goods, the law can treat you as the manufacturer.
What should a distribution agreement include?
A distribution agreement sets out your rights to sell the supplier’s products, what you owe them in return, and how the relationship ends. If the supplier sends you their standard contract, assume it was written to protect them. That’s not a criticism. It’s just who paid for the drafting.
These are the clauses Lawpath lawyers mark up most often when distributors bring agreements in for review.
| Clause | What to look for | What to push for |
|---|---|---|
| Start date and conditions | Start conditional on something (like retailer ranging) with no deadline | A longstop date, and a clear outcome if the condition isn’t met |
| Term and renewal | Automatic renewal on the supplier’s terms, or a term too short to recover your set-up costs | An initial term long enough to earn back your investment, plus a right to renegotiate at renewal |
| Territory and exclusivity | Vague geography, or exclusivity that only covers some channels | Defined territory and channels, in writing, with a map or list if needed |
| Carve-outs | Supplier keeps its existing accounts or online sales | A precise schedule of excluded accounts, and nothing added later without your consent |
| Minimum purchase targets | Missing a target triggers termination | Missing a target converts you to non-exclusive first |
| Pricing | Supplier can change prices at any time | Written notice of price changes, long enough to honour your own quotes |
| Warranty and recalls | You carry warranty and recall costs for defects you didn’t cause | Supplier covers manufacturing defects and recall costs |
| Liability | Your liability is unlimited, theirs is capped | A mutual cap on liability |
| Termination | Supplier can terminate for convenience at short notice | Cure periods for breach, and a buy-back of your unsold stock on exit |
| Change of control and assignment | You can’t sell your business without consent | Consent that can’t be unreasonably withheld |
Stock buy-back is the one people forget. If the supplier ends the agreement, what happens to the $40,000 of their product in your warehouse? Without a buy-back clause, the answer is usually “your problem”.
If you’re on the other side and appointing distributors for your own product, the same clauses apply in reverse. A supply agreement covers the simpler case where you’re supplying businesses without appointing them as distributors.
Can a supplier tell you what price to sell at?
No. A supplier can recommend a retail price, but it can’t force you to sell at or above a minimum price. That’s resale price maintenance, and section 48 of the Competition and Consumer Act 2010 (Cth) prohibits it outright. Threatening to cut off supply because you discounted counts too.
The narrow exception is where the supplier has notified the ACCC or obtained authorisation, which is rare for small brands. If a contract you’re offered contains a price floor, flag it. It’s a red flag about the supplier as much as the clause.
Does exclusivity break competition law?
Usually not. Exclusive territories and “you can’t sell competing brands” clauses are exclusive dealing, which is only illegal if it substantially lessens competition in a market. For a small distributor with a modest share, that bar is rarely reached. Big players with dominant positions need to be far more careful.
Are the supplier’s standard terms fair game?
Possibly not. Since November 2023, unfair contract terms in standard form small business contracts aren’t just void. Businesses that use them can face penalties. A contract counts as a small business contract if at least one party employs fewer than 100 people or turns over less than $10 million.
So if a supplier hands you a take-it-or-leave-it agreement with one-sided termination or variation rights, you have more leverage than you think. Pointing that out politely often gets clauses changed.
When does a distribution deal become a franchise?
When you pay an upfront fee for the right to trade, operate under the supplier’s brand, and follow a marketing system the supplier substantially controls, you may be in a franchise, whatever the contract calls itself. A new Franchising Code of Conduct has applied since 1 April 2025 to agreements entered into, renewed, extended or transferred from that date.
That matters because the Code brings disclosure obligations, cooling-off rights and restrictions on certain terms. Our guide to franchise vs distribution agreements walks through the dividing line.
Do you need a licence to be a distributor in Australia?
Not a general one. Australia has no “distribution licence”. For everyday consumer goods like homewares, clothing or stationery, an ABN, GST registration and your contracts are usually enough. Regulated products are a different story, and the rules can differ state by state.
| Product type | What usually applies |
|---|---|
| Food and beverages | Notification or registration with your council or state food regulator. Higher-risk categories such as meat, dairy and seafood need a specific state licence (for example from the NSW Food Authority or Dairy Food Safety Victoria). |
| Medicines and medical devices | Products must be on the Australian Register of Therapeutic Goods. Wholesaling scheduled medicines needs a state or territory wholesale licence. |
| Alcohol | A state or territory liquor licence covering wholesale supply. Wine sold wholesale usually attracts wine equalisation tax (WET) at the last wholesale sale. |
| Tobacco | Every state and territory now licenses tobacco sellers, including wholesalers, and licences don’t carry across borders. |
| Vapes | Since 1 July 2024, supply is limited to pharmacies and importing requires a licence and permit. Not a realistic category for a new distributor. |
| Cosmetics and chemicals | Importers of industrial chemicals, including many cosmetic ingredients, must register with AICIS. Storing dangerous goods triggers state WHS rules. |
| Electrical equipment | In most states, the responsible supplier of in-scope electrical equipment must register on the national database and the product must meet safety standards. |
| Children’s products and toys | ACCC mandatory safety standards (for example, small parts and button batteries) apply to everyone in the supply chain, including distributors. |
Starting a medicine or medical device distribution business
This is where “just distributing” gets serious. Overseas manufacturers can’t supply therapeutic goods into Australia without a local sponsor listed with the Therapeutic Goods Administration (TGA). Very often, the distributor becomes that sponsor.
Being the sponsor means you’re legally responsible for the product’s ARTG entry, adverse event reporting and recalls. Plenty of new medical distributors sign up without realising they’ve taken on regulatory obligations that used to sit with the manufacturer. Price that risk into your margin and your contract.
Tobacco and alcohol: state rules that keep changing
Tobacco licensing has tightened fast. Victoria was the last state to introduce a scheme, with wholesale and retail tobacco licences enforced from 1 February 2026. You need a licence for each premises, and a licence from another state won’t cover you.
Liquor licensing varies more between states than almost anything else on this list. If you plan to distribute nationally, budget for a licence in each state you’ll sell into, and check whether you can sell to retailers interstate from a single warehouse.
Importing goods to distribute
There’s no general import licence either. Consignments worth more than $1,000 need a formal import declaration lodged with the Australian Border Force, which is why most new importers use a licensed customs broker. Food, plant and animal products also have to clear biosecurity, and the Department of Agriculture’s BICON database tells you the conditions for each product.
Check BICON before you place the order. Some products need an import permit or treatment certificate that has to be arranged before shipping. Our guide to importing goods from overseas covers the process in more detail.
Warehousing and transport
Running your own warehouse can need council approval, especially for changes of use, dangerous goods storage or truck movements near homes. If you manage heavy vehicle transport, Chain of Responsibility duties under the Heavy Vehicle National Law also apply to you, not just the driver. Using a third-party logistics provider shifts much of this, but read their liability terms closely.
How do you become an authorised distributor for a brand?
Being an authorised distributor means the brand has formally appointed you to sell its products, usually in writing, with access to genuine stock, warranty support and marketing materials. Retailers value that status because it protects them from grey-market and counterfeit stock.
- Find the right contact. Many brands have a “become a distributor” page or a regional sales manager. Trade shows are often faster than cold emails.
- Pitch with evidence. Bring your channel plan, retailer relationships, warehousing setup and a realistic first-year volume. Brands want proof you’ll protect their reputation.
- Expect due diligence. Suppliers may check your financials, credit history and existing brand portfolio, and ask for a director’s guarantee.
- Negotiate, then sign. Use the clause table above as your checklist. Get the agreement reviewed before you sign, not after the first dispute.
Can you distribute without being authorised? Buying genuine branded goods and reselling them is generally lawful in Australia, including parallel imports. But you can’t claim to be authorised, the brand can refuse warranty support, and the consumer guarantees still apply to you. That usually makes authorisation worth the effort.
What we see in Lawpath consultations
Lawpath lawyers review distribution, dealer and reseller agreements every month. The same problems come up again and again, and almost none of them are about the product.
Distributing for years with no written contract
More often than expected, a distribution relationship runs for years on invoices and emails alone. Sometimes it was inherited when the owner bought the business. Then one side wants out, and nobody knows the rules.
A contract can still be implied from the way the parties have dealt with each other, and ending it usually requires “reasonable notice”. What counts as reasonable depends on how long it’s run and how each side has behaved. That’s an argument, not an answer. A written agreement turns it into a clause.
“Exclusive” territories that aren’t really exclusive
A consistent pattern: the headline says exclusive, but a schedule at the back lets the supplier keep its existing distributors, direct accounts and online sales. Distributors sign on the headline and find out about the schedule when a customer tells them they’re already being supplied.
Read the carve-outs before anything else. Ask for them to be listed by name, and for a clause stopping new ones being added without your agreement.
Minimum targets tied straight to termination
Supplier drafts commonly link missing a minimum purchase target directly to termination. Our lawyers routinely push for a step-down instead: miss the target, and you lose exclusivity but keep the account. It protects the relationship you’ve spent years building if one bad year hits.
Close behind: auto-renewal clauses with no renegotiation window, start dates tied to conditions with no deadline, and dispute resolution clauses that still refer to repealed legislation. Old templates travel a long way.
Product compliance follows the product
Distributors of children’s products and craft goods regularly assume safety standards are the manufacturer’s problem. They aren’t. Mandatory standards apply to everyone who supplies the product, whether you sell through retailers, wholesale or at workshops.
The practical fix our lawyers recommend: keep the supplier’s test reports for every component on file, and write the supplier’s compliance promises and recall obligations into your agreement.
“Become a distributor” offers that are really something else
Some advertised distributor opportunities ask you to buy a starter stock package, sometimes funded through a finance arrangement, before you’ve sold anything. When the stock doesn’t move, unwinding both the distributor agreement and the finance is hard. If the opportunity makes money from recruiting you rather than from you selling, get the paperwork reviewed before you pay.
Find the perfect lawyer to help your business today!
Frequently asked questions
How do I become a distributor in Australia with no experience?
Pick an industry you understand as a buyer or employee, start with a non-exclusive or reseller arrangement, and prove you can move volume before asking for exclusivity. Register an ABN and GST, set up a company if you’ll carry meaningful stock, and get your first agreement reviewed.
Do I need a licence to be a distributor in Australia?
There’s no general distributor licence. Everyday consumer goods need only an ABN and standard registrations. Regulated products such as food, medicines, alcohol, tobacco, chemicals and electrical equipment need specific state or federal licences or registrations.
How do distributors make money?
Distributors earn the margin between the supplier’s price and their own sell price, plus supplier rebates, marketing funds and logistics fees. Margins are thin once freight, storage and credit terms come out, so profit depends on volume and tight cost control.
What’s the difference between a distributor and a stockist?
A stockist is a retailer that sells a brand’s products to end customers. A distributor sits one step up the chain, buying from the brand and supplying stockists. Distributors usually have a formal appointment and territory; stockists usually have a wholesale account.
Do I need a company to start a distribution business?
No, you can start as a sole trader. Most distributors move to a company quickly, because they carry stock, extend credit and hold product liability risk. A company limits your personal exposure, although suppliers may still ask for a director’s guarantee.
Can I resell products without permission in Australia?
Generally yes, if the goods are genuine and lawfully bought, including parallel imports. You can’t claim to be an authorised distributor, misuse the brand’s trade marks, or avoid consumer guarantees, and the brand may refuse warranty support.
Can a supplier set my resale price?
A supplier can recommend a retail price but can’t force you to sell at or above a minimum. Enforcing a minimum resale price is resale price maintenance, prohibited by the Competition and Consumer Act unless the ACCC has been notified or has authorised it.
How long does a distribution agreement last?
Whatever the parties agree. Initial terms of one to five years with renewal options are common. Push for a term long enough to recover your set-up costs, and watch for automatic renewal on terms you can’t renegotiate.
Can a supplier end my distribution agreement early?
Only if the agreement allows it, or if you’ve seriously breached it. Many supplier drafts include termination for convenience at short notice. Negotiate cure periods for breach, a minimum notice period, and a buy-back of unsold stock if the supplier ends the relationship.
What if I’ve been distributing without a written contract?
A contract can still be implied from your invoices, emails and past dealings. Either side will usually need to give reasonable notice to end it. Put a written distribution agreement in place now, while the relationship is still friendly.
Ready to become a distributor?
If this feels like a lot, that’s normal. Every distributor who’s now running trucks and a warehouse started with one product, one supplier and one contract they weren’t sure about. You don’t need to have every licence and clause sorted today. You need the agreement right before you order stock.
Lawpath has helped more than 650,000 Australian businesses get set up, with 550+ legal templates and lawyers on hand when a clause needs a second look. The best first move is simple: start your Distribution Agreement today.
