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I'm still at the idea stage. The product's main component is a towel. I imagine buying a bunch of towels at walmart or some other retail is not the way to go. Too expensive and probably will violate several trade laws. How do I go about finding a wholesaler/reseller of towels that will allow me to use the towel with my product (rights to resell)?

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Did you even try google. Just like you can find plain t-shirts or hats to screen print, you can also get many types of towels. Options include beach, bath, hand, golf...

I would start with a local screen printing/embroidery shop. They can tell you where they get their supplies. They probably have a catalog you can look at.

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Search Google to find a company in the same city or state as you (that matters for some reason) to find a company that offers a niche product in similar field and just ask nicely.

For example, to find a wholeseller of beach towels find a wholeseller custom hats for company stores and ask them where they would go. If you're not a competitor most people have no problem telling you where to find

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