Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
Selling a product in Ireland is based on several factors. Facilitated by the compact size of the market and dependent on the expected sales volume, sales can be improved with the use of tailored marketing techniques. Sales may be achieved through any of the following distribution methods:
- The establishment of a local sales office to serve the Irish market and potentially include a sales/service distribution point for Europe;
- Through an agent or distributor whose activity may cover specified areas, the entire country, or include other European markets;
- Through established wholesalers or dealers in Ireland; and
- Directly to department stores, chain stores, retailer cooperatives, consumer cooperatives, or other end user organizations.
Using an Agent or Distributor
International firms usually have one exclusive representative for the country, although it is common for the representative to appoint sub-agents to cover certain sectors of the market if sales and profit margins warrant it. In addition, a representative located in Ireland may be in an ideal position to market a product throughout the European marketplace.
- Consumer goods are best sold through a distributor carrying stock for immediate delivery and sale, whereas capital goods and industrial equipment are more effectively marketed through a commissioned agent. In the case of certain raw materials with low mark-ups, or for capital goods and supplies for which there are limited numbers of potential users or buyers, direct sales techniques are effective.
- Regular communications and visits to a newly appointed representative in Ireland are useful to establish successful relationships, to get a better understanding of market specifics, trends, and developments, and to assist in the resolution of any early problems.
- An effective and responsive after-sales-servicing system should be incorporated into distribution plans.
- Frequently, U.S. firms will rely on the Irish distributor to handle the details of labeling and packaging for Irish and European preferences and the registration of the product.
- The familiarity and fluency of many Irish business firms with European languages also underline Ireland’s capacity as a springboard for sales to continental Europe, including Central and Eastern Europe.
Use of an agent or distributor is not legally required however, three kinds of distribution agreements are covered by Irish legislation: exclusive, quasi-exclusive, and informal. In an exclusive distributorship, the distributor has the sole right to sell specified goods within a defined area. Quasi-exclusive distributorships allow the distributor to sell almost all the specified products within a defined area. Informal distributor arrangements impose heavier obligations on the distributor.
If contractual obligations are not met in a distribution agreement of indefinite term, it cannot be terminated until reasonable notice and/or fair compensation is provided. In general, grantors should consider protecting themselves by entering into agreements for definite periods rather than an indefinite period. In addition, specific performance target clauses should be incorporated into the distribution agreement.
- Under EU legislation (Commercial Agents Regulations 1994), a commercial agent is a self-employed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, or to negotiate and conclude such transactions on behalf of the principal. Each party is entitled to a written document setting out the terms of their contract.
- EU legislation regarding unilateral termination of distribution agreements (EEC 86/653) applies and is designed to provide the local distributor with some degree of protection and monetary compensation when an agreement is terminated for reasons other than cause. The legislation will apply regardless of any clause in the agreement itself, and the parties may not deviate from the legislation as long as the distribution agreement is in force.
Establishing an Office
The Companies Act 2014 came into effect on June 1, 2015. The new Act affects all companies that were already on the register and was introduced to modernize and simplify company law, reduce administrative burden and ensure good corporate governance. All private companies limited by shares are required to change to the new company law and convert into one of two company types: Private Limited Company (LTD) which must have at least one director but must have a separate secretary or Designated Activity Company (DAC) which must have a least two directors. The Act has created new company types to replace all types of company. Company names must include a suffix at the end of its name:
PLC – Public Limited Company
PUC – Public Unlimited Company
PULC – Public Unlimited Company with no share capital
ULC – Private Unlimited Company
CLG – Company Limited by Guarantee (public guarantee companies)
U.S. companies may conduct business in Ireland through a branch or a place of business. A branch is a considered a division of a foreign company trading in Ireland that has the appearance of permanency, a separate management structure, and the ability to negotiate contracts with third parties, as well as reasonable financial independence. Branches must file company financial statements with the Registrar of Companies (https://www.cro.ie/About-CRO/Whats-New/CRO-New-System-Updates).
U.S. firms interested in establishing an office in Ireland should evaluate:
- Enterprise Ireland’s Guidance for International SMEs to obtain practical insight and advice on establishing business operations in Ireland,.
- Local Enterprise Office’s Supporting SMEs Online Tool for information on how SMEs can set up a business in Ireland from registration and legal advice to guidance on taxation and employment issues.
Opportunities exist for U.S. companies to establish franchise systems in Ireland across niche sectors. U.S. franchises compete for market share by country of origin primarily with Ireland and the U.K.
U.S. businesses looking to franchise within the European Union will likely find that the market is quite robust and friendly to franchise systems in general. There are a number of laws that govern the operation of franchises within the EU, but these laws are fairly broad and generally don’t constrain the competitive position of U.S. businesses. The EU Regulation 4087/88 EEC regarding franchising provides a unified code for all the member states. Its primary focus concerns price fixing, transfer pricing, non-competition clauses, and exclusive dealing. It also exempts certain franchise agreements from the EU anti-trust regulations.
The franchisors should take care to look not only at EU regulations, but also at the local laws concerning franchising. More information on specific legislation can be found on the website of the European Franchise Federation.
The EU has yet to adopt legislation harmonizing the direct selling of consumer products. However, there is a wide range of EU legislation that impacts the direct marketing sector. Compliance requirements are extensive for marketing and sales to private consumers. Companies need to focus on the clarity and completeness of the information they provide to consumers prior to purchase and on their approaches to collecting and using customer data. The following gives a brief overview of the most important provisions flowing from EU-wide rules on distance-selling and on-line commerce.
Processing Customer Data
The EU has strict laws governing the protection of personal data, including the use of such data in the context of direct marketing activities. For more information on these rules, please refer to the Data Privacy section.
Distance Selling Rules
In 2011, the European Union overhauled its consumer protection legislation and merged several existing rules into a single rulebook, the Consumer Rights Directive, the provisions of which have been in force since 2014. The Directive contains provisions on core information to be provided by traders prior to the conclusion of consumer contracts. It also regulates the right of withdrawal, includes rules on the costs for the use of means of payment and bans pre-ticked boxes. There are updates to these rules that will apply from May 2022. For more information, consult the EU Commission’s useful tool to learn about consumer rules.
in March 2019, the European Union adopted a set of two directives which govern EU-wide contract rules for the online sales of goods and the supply of digital content and services, but these rules do not apply until January 2022.
Alternative Dispute Resolution
In 2013, the EU adopted rules on Alternative Dispute Resolution which provide consumers the right to turn to quality alternative dispute resolution entities for all types of contractual disputes including purchases made online or offline, domestically or across borders. An Online Dispute Resolution (ODR) platform has been created specifically to resolve disputes about contractual disputes about online transactions.
Distance Selling of Financial Services
Financial services are regulated by a 2002 Directive (2002/65/EC), which was designed to ensure that consumers are appropriately protected with respect to financial transactions taking place where the consumer and the provider are not face-to-face. In addition to prohibiting certain abusive marketing practices, the Directive establishes criteria for the presentation of contract information. Given the special nature of financial markets, specifics are also laid out for contractual withdrawal.
Direct Marketing over the Internet
The e-commerce Directive (2000/31/EC) imposes certain specific requirements connected to the direct marketing business. Promotional offers must not mislead customers and the terms that must be met to qualify for them have to be easily accessible and clear. The Directive stipulates that marketing e-mails must be identified as such to the recipient and requires that companies targeting customers on-line must regularly consult national opt-out registers where they exist. When an order is placed, the service provider must acknowledge receipt quickly and by electronic means, although the Directive does not attribute any legal effect to the placing of an order or its acknowledgment; instead, this is a matter for national law. Vendors of electronically supplied services (such as software, which the EU considers a service and not a good) must also collect Value Added Tax (VAT).
No formal regulations relating to joint ventures in Ireland currently exist. In each case, the terms of the joint venture are the subject of a co-operation agreement between the parties concerned. Generally, the agreement sets out the basis on which the parties are to co-operate on a particular joint venture. Numerous international firms have joint venture and licensing arrangements with manufacturers based in Ireland.
Government approval is not necessary for licensing agreements and no statutory restrictions are imposed on the amounts of royalties or other details of licensing arrangements. However, an international firm intending to license the use of its trademark to a company based in Ireland must designate the licensee as a registered user, and an appropriate application must be lodged in order to prevent any future legal problems.
U.S. firms can gain access to the European marketplace by adopting a joint venture/licensing strategy incorporating Ireland. Enterprise Ireland, the Irish government agency responsible for the development of indigenous Irish industry, continually seeks to develop joint ventures, licensing, technology transfer, and other types of strategic alliance arrangements between Irish and international firms.
As with all business investment decisions, U.S. firms considering joint venture, licensing, or other strategic alliance arrangements in Ireland should seek professional advice regarding the legal, financial, and taxation implications of the agreements being negotiated. The U.S. Commercial Service, U.S. Embassy, Dublin can assist U.S. companies in addressing these issues.
Reliable courier services are readily available in Ireland through both international and indigenous express delivery services. Express service points are serviced at several locations around the country. Average delivery time from Ireland to most parts of the U.S. is two days, with one day to the east coast.
The de minimis value for Ireland for which no customs duty is collected is €150. Since July 1, 2021, Value-Added Tax (VAT) is payable on all goods entering the EU, irrespective of their value and is always collected, irrespective of the amount due. There is no relief from the payment of Customs Duty, VAT or Excise Duty on low value consignments, irrespective of their value, of tobacco, tobacco products, alcohol products, and perfumes or toilet waters.
U.S. exporters seeking an Irish agent or distributor to service the domestic and European markets should consider visiting Ireland to appraise first-hand the relative merits of prospective agents. In addition to acquainting the U.S. exporter directly with local market conditions and special sales characteristics, a visit also provides an opportunity to discuss policy and sales campaigns with the agent or distributor, review responsibility for customs fees, taxes, labeling, transportation modalities, business procedures, payments and if necessary, registration. These responsibilities should always be clearly defined before undertaking a long-term relationship.
The U.S. Commercial Service at the U.S. Embassy in Dublin offers a range of customized business solutions to U.S. firms seeking to identify and/or perform due diligence on agents, distributors, sales, or business partners in Ireland. U.S. firms interested in achieving representation in Ireland should contact the U.S. Commercial Service in Dublin for information on matchmaking services such as the Gold Key Service (GKS), International Partner Search (IPS) and other customized services such as International Company Profile (ICP) for background checks.
U.S. firms are strongly encouraged to maintain close contact with newly appointed agents or distributors throughout their working relationship. Since certain products and equipment require servicing to maintain their useful life, the U.S. exporter should determine when this is needed and develop a distribution network to include such servicing by qualified personnel. To develop trust, loyalty and marketing skills, U.S. producers frequently bring their agents or distributors to the United States for training and marketing assistance.
Large Irish companies have listings on the Dublin and London stock exchanges, and in recent years, emerging high technology and internet companies have secured listings on the NASDAQ and the Frankfurt Stock Exchange. Publicly traded companies must publish substantive annual reports which meet the reporting requirements laid down by the accounting bodies and which comply with stock exchange regulations. In addition, company legislation requires that every registered company both privately held and publicly traded must file a set of audited accounts annually with the Companies Registration Office. Copies of such audited accounts can be obtained directly from the Companies Registration Office for specified fees. In addition, mercantile agencies such as Dun & Bradstreet Ireland at https://www.dnb.com/ie/ will undertake commercial credit reporting on any company in Ireland.