Many businesses that are service oriented are usually welcomed by their potential vendors into a new geographic area. However, other disciplines such as distribution, retail or manufacturing may encounter resistance. Any time new competition moves into an area, existing businesses will try and use their influence with vendors to impede the competitor by blocking access to key product lines.
This practice, known as “territorial restriction," may appear as though it violates anti trust laws. However, the interpretation of these laws has varied by case and court, and as a result, manufacturers have successfully used territorial restriction as an effective tool to manipulate and control the availability of their product in different markets.
Therefore it is extremely important to verify the products and brands that will be required for a particular market are available for the new branch. Vendor negotiations in this regard assume a variety of different postures. Persuading a reluctant vendor or manufacturer to support a new endeavor is probably more art than science, and sometimes combines a liberal dose of enticement through opportunities with a polite explanation of the consequences of their non support which might include utilizing their competitor’s products.
It is also important to recognize that if the branch is located in close proximity to the original business and shipping will be done internally, a vendor has no legal authority to prohibit transportation of their products from one branch to another.