Central Purchasing

In distribution networks, the head of the network may set up a central purchasing body to which franchisees may be invited or be required to obtain supplies.

The case law does not focus on the name of the central purchasing body but on the contracts concluded by it with its members. When the intermediary ensures the merger of orders, has the goods delivered to a warehouse for him to assume the bursting between his various affiliates, communicates his own address to be indicated on the invoices, and personally proceeds to the payment of the suppliers, the judges recognize the central as a commission agent having acted in his personal name (T. com. Paris, 16e ch., 25 Sept. 1985: Letter distrib. 1986/4).

If, on the other hand, the central simply intervenes in the grouping of orders placed directly with suppliers by the affiliates, that the delivery is made directly to the distributors and that the central only proceeds to the splitting of invoices directly paid by the affiliates, the courts do not hesitate to qualify the central as an agent acting in the name and on behalf of others (Cass. com., 12 Nov. 1985: Letter distrib. 1985/2).

Structuring through a central purchasing body offers better purchasing conditions, thanks to economies of scale and possible quantitative margins and discounts from suppliers, but also promotional services for all members.

Find here our video on the referencing center and the purchasing center.