When a company signs a dealership contract with another company or with individuals, it allows them to distribute and sell the products of the manufacturer. Manufacturers need to find dealers in different areas so that their products can be distributed and sold out conveniently.
What is a dealership cancellation letter?
When the manufacturing company learns that the dealer is not working up to the mark or violating the rules set by the contract, it can terminate the dealership contract. This is a formal business letter that is generally drafted to notify the recipient of the cancelation of the dealership. When the dealer learns about it, he can take the necessary steps to proceed with the next step
Who should write the dealership termination letter?
The representative of the manufacturing company is assigned the task to write the dealership agreement cancelation letter. In some cases, the owner of the company or the manufacturer himself writes this letter and conveys his message.
What is the objective of the letter written to do away with the contract?
The primary objective of this letter is to let the dealer know that he is no longer associated with the manufacturer writing this letter and he has no authority to sell the products under the name of the manufacturer. In other words, this letter prevents the dealer from selling the products of the manufacturer when it has been noticed that the trader was not being honest.
What to include?
It is not easy to inform someone that they are no longer authorized to act as a dealer of a particular brand. However, the right choice of words and the right type of content can get the job done in an efficacious way. For this purpose, you should make sure that you don’t forget to add the following details to the letter:
Details of the dealership contract:
Since you are writing to do away with the contract, it is important to mention which agreement you are referring to. For this purpose, you should mention the date on which you signed the agreement with the trader and some other pertinent details.
A decision to cancel the trade contract:
After having provided the contract details, the producer should tell the trader that he has decided to terminate the dealership with him.
Specification of the reason:
A sender must specify in the letter as to what made him take this decision. It is the right of every trader to know why the contact with him is being cancelled. Therefore, this information should never be ignored.
Below is a sample letter that can be read for more in-depth insight into writing this letter.
Sample dealership cancellation letter:
Subject: Dealership cancellation for [X]
Respected (mention the name of the dealer),
This letter is being written with reference to the dealership agreement that was signed between you and (mention the name of the company) on 14th February 20XX. We would like to inform you that the company has decided to terminate that agreement with you because of violating the terms and conditions of the agreement.
It has been brought to our knowledge that you have started to sell our products at higher than agreed prices that have brought shame to the name of our company. it was agreed in the contract that you will not sell the products at prices different than agreed-upon rates. We have written you many letters and emails and have asked you to explain. However, we failed to get any response from your side.
This is a transparent breach of contract and as a result, the company has decided to terminate the dealership with you. We hereby, request you to return us all the items that have not been sold yet.
We have started to complete legal formalities and you will be notified very soon about it. Please acknowledge this letter and let us know that you have read and understood this letter.
Should you have any questions regarding this matter, you can contact us (mention the phone number).
Sincerely,
Name of the sender
Sender’s designation in the company
Signatures of the sender
_________________
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