A:  Setting up distribution so that it does not come back to haunt you in years to come requires that you think out where you want to be in the future.  One of the first things you should consider is whether it is advantageous for you to set up the production of this new product under a new manufacturing company.  There are tax advantages provided to manufacturers and you should discuss the positives and negatives with your accountant. 

On the matter of distribution you must create a distributor agreement that provides information pertaining to territories (if applicable), inventory, initial orders, ongoing order requirements, pricing and how much advance notice you will give on price increases, warranty claims (requires a great deal of thought on compensating the distributor), co-operative advertising, termination, confidentiality, legal jurisdiction, term of the agreement, renewal, and numerous other items.

You probably have distribution agreements with manufacturers that you currently deal with.  Use them as templates to create your own.  Then run the finished document past your legal council to ensure that you have covered any local laws.  You have an advantage in that you will be selling to individuals you can relate to - other HVAC dealers.  You know what motivates you.  You know the things that other manufactures do that turn you off their products.  Remember this when putting your agreement together.

Try to keep the distributor agreement as simple as you can and use as much layman language as you can.  The more complex you make the document the harder it will be to get a potential distributor to sign it and, at the end of the day, what you want is increased sales - not an award for the most intricate distributor agreement ever produced.