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The narrator outlines essential elements to consider before entering a distribution agreement. First, it is crucial to have a clear understanding of the products involved. The agreement should explicitly define which products the distributor can distribute to avoid future disputes. This clarity is especially important if exclusive rights are granted, such as for distribution in a specific region like Australia. By ensuring that the agreement outlines the exact goods tied to the exclusive rights, both parties can prevent misunderstandings and disputes down the line.