Distributor Termination Letter

What is a distributor termination letter and how to write one?

Well, you may find yourself in a situation where you need to discontinue a business relationship with a distributor or supplier for some reason, so you need to inform them formally of your decision and make official.

Termination checklist

Before you start, a few points to consider:
  • Is there a contract? If yes then note down the contract number and date.

  • Note down the termination effective date

  • Are there any penalties for early termination?

  • Are the alternatives really better?

  • Are the books leveled? Do they owe you anything?

Letter outline: what goes in the termination letter?

  • Start with the statement, which is nothing but your intent to terminate your agreement with the distributor.

  • State the reasons behind your decision. This optional but recommended as a standard business practice.

  • Reference the contract document that governs the relationship and clear out any legal consequences.

  • Request for the settlement of pending transactions.

Now that we know the outline, let’s put it in a real example.

Dear [Distributor name],

This letter is to inform you of our decision to terminate the business relationship with your company effective [some date] in accordance to the contract signed by both of us on [contract date] due to [reason for termination].

As a result of this, all ongoing transactions need to be finalized and settled down. Our financial and logistics team will meet with your respective side to discuss the details of the termination process.

Thank you for your business.


Distributor Termination Letter