OK.  So after a lot of effort (not to mention paperwork), you have a European network of distributors working hard to sell your products.  Everything seems to be going well, until you realise that actually they aren't working that hard after all and, despite a friendly reminder, you still feel that some of your distributors are underperforming.

You read somewhere that commercial agents are entitled to compensation on termination of agency agreements, but what happens if you decide you want to terminate your agreement with your distributor?

Right to terminate?
The first thing you need to consider is whether you actually have the right to terminate.

After all, wrongful termination can leave you facing a damages claim from your distributor.  Unlike commercial agents (and competition law aside), there is no equivalent European Directive governing minimum or obligatory terms in distribution agreements throughout Europe, so the starting point tends to be general contract law. 

In the UK, the position is that if your distributor has committed a material breach of the contract, then you will be able to terminate, provided that you follow the correct procedures in the contract.  However, what is or is not 'material' can sometimes be a grey area. As a result, most contracts will actually specify the circumstances in which you may bring the agreement to an end. 

How and when to terminate – giving notice
Having read the termination clause in your contract, you can now see that, while there has not been a material breach, your distributor's continuing poor sales nevertheless give you the right to terminate.  It is essential that you adhere to any notice provisions in the agreement, otherwise you could again find yourself open to a claim for damages. 

If you want to terminate in the Netherlands (and your contract is governed by Dutch law), even if you comply with the notice period in your contract, you can only terminate where you have serious cause for doing so.  For example: If there isn't a notice period in the contract, then you may only terminate if it is fair and reasonable to do so. 

On the other hand, you do not need to give your French distributor any reason at all for terminating – although you will still need to give written notice and stick to the minimum notice period in the contract.  In the UK and Germany, likewise – simply do what the contract says.