Distributor, agent or direct: choosing a sales model per market.
Use a distributor when the market needs local stock, service, tender access or a local registration holder and your revenue there cannot yet pay for your own team. Go direct when one market can carry an entity and people, and use an agent only where you can invoice customers yourself and know what the agent can claim when you part. Decide market by market, not once for the whole company.
General information, not legal advice. Local law varies; take local counsel.
The three models
- Distributor. Buys from you, holds stock, resells at its own price and carries the customer credit risk. Earns a margin.
- Agent. Finds and negotiates orders for you. You invoice, ship and collect. Earns a commission.
- Direct. Your own entity and people in the market. You keep the margin and carry every cost.
What decides it
- Registration holder. If a local company must hold it, someone local does whatever model you pick. See who holds the registration.
- Tenders. Public buyers often want a locally registered bidder with a track record. See medical device tenders.
- Stock and service. Implant sets and field service need a warehouse and people in the country.
- Deal size. A few large deals a year can suit an agent. Thousands of small consumable orders suit a distributor.
- Clinical support. If every case needs a specialist in theatre, someone has to pay that person.
- Credit risk. A distributor carries hospital payment terms. With an agent or direct, you do.
- Entity cost. A company, licences, tax and payroll. Only revenue pays for that.
Decision table
| Model | Fits when | Watch |
|---|---|---|
| Distributor | Local holder required, tenders, stock and service needed, revenue below the cost of a team | Who holds the registration; exclusivity tied to targets |
| Agent | Few large deals, you can invoice and ship from abroad, little service | Termination claims, especially in the EU |
| Direct | Revenue can pay for an entity and a team; clinical support decides the sale | Fixed cost before the revenue is proven |
| Distributor plus your specialist | Big market, clinical sale, small team | Write down who owns which accounts |
| Master distributor | Several small neighbouring markets | Its real reach in each country |
| Tender agent | Sales mostly through public tenders | Whether a foreign maker may invoice under the tender rules |
Our market data classes 106 of 113 markets as distributor-led for a foreign small or mid-size maker, 5 as mixed and 2 as direct-led. 97 of the 113 calls cite a source, 96 of them a US Commercial Service country guide; the other 16 are our own judgement and carry no source. Each country page shows the line, with its source where there is one.
Legal differences that cost money
EU commercial agents. Under Council Directive 86/653/EEC, an agent is entitled on termination to an indemnity or to compensation, depending on which the member state chose (Article 17). The indemnity is capped at one year of the agent's average annual pay over the previous five years. Neither is due if you end the contract for a serious default by the agent, or if the agent quits without justification (Article 18). The contract cannot waive this in advance (Article 19). Price it in before you appoint.
Distributors. The directive does not cover them, but some countries give distributors similar claims through national law or case law.
Registered agencies in the Gulf. In the UAE, Federal Law No. 3 of 2022 on commercial agencies has applied since 16 June 2023. The Ministry of Economy says agency business is reserved for UAE nationals and for public joint-stock companies with at least 51 percent national capital, and that an agency only counts once it is registered with the Ministry. A registered agency changes your position when you part, so decide it with counsel, not by default.
General information, not legal advice. Local law varies; take local counsel.
Worked example
An illustration. A maker of a patient monitoring system with single-use sensors plans three markets. In Saudi Arabia an SFDA-licensed authorised representative holds the licence and the channel is distributor-led: a distributor, with an independent holder if possible. In Germany its CE marking is the authorisation and the channel is mixed: a distributor first, a direct team once sensor revenue repeats. In the UAE a licensed local agent files the registration: a distributor, and no registered agency until counsel has read the contract.
Signals it is time to go direct
- The margin you pay the distributor in one market is more than an entity and a small team would cost.
- Customers buy on clinical support you already fund.
- The distributor will not add capacity to match the market.
- You hold the registration, or can move it.
Plan the exit first: registration transfer, stock buy-back, customer handover and notice. See replacing a distributor for the sequence and the distribution agreement for the clauses.
Common mistakes
- Appointing an EU agent without pricing the termination claim.
- Registering a Gulf agency because the partner asked.
- Letting the distributor hold the registration, then trying to go direct.
Questions people ask
What is the difference between an agent and a distributor?
A distributor buys your product, holds stock, resells at its own price and carries credit risk, earning a margin. An agent finds orders for you on commission while you invoice, ship and collect. In the EU, agents also have termination rights under Directive 86/653/EEC.
When does a distributor beat a direct team?
When the market needs a local registration holder, stock, service or tender access and your revenue there cannot yet pay for an entity and people. For a small device maker, that describes most markets.
Can I mix models in one country?
Yes. A common mix is a distributor for stock, credit and tenders, plus your own clinical specialist for cases and training. Write down who owns which accounts so the two do not compete.
When should I move from distributor to direct?
When the margin you pay there is more than an entity and a small team would cost, customers buy on support you already provide, and you control the registration. Plan the exit before you tell anyone.
See the channel and the partners for ten markets.
The Next 10 Markets report gives the channel structure and the registration holder rule for ten markets ranked for your device, and names up to ten licensed distributors in each. Start free with your top 3 markets in the Market Finder, and follow your markets in Market Watch: new licensed distributors, once a week.
Get the Next 10 Markets report, €490No-risk guarantee: if this report is not worth €490 to you, reply within 7 days of delivery and the fee is refunded in full; you keep the report. It is also refunded if the report names fewer than 30 licensed channel partners you did not already know.
Delivered one working day after your intake.
Sources: Council Directive 86/653/EEC on self-employed commercial agents, Articles 17 to 19 (EUR-Lex); UAE Ministry of Economy on Federal Law No. 3 of 2022; US Commercial Service country guides and regulator sources as cited on each country page; Bastion Hale market data of 23 October 2026, read by the Market Finder (channel method). General information, not legal advice. Last reviewed 25 October 2026.