What is an “exclusive” relationship?

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What is an “exclusive” relationship?
I met with a retained search firm recently and they mentioned that they would take on our search on an exclusive basis.  What does this mean?
A search firm requiring an exclusive relationship means that they will be the only firm used on the search until it is completed.  So if you have used another firm to generate candidates, make sure that you read your contracts to determine if you are at risk of potentially paying two firms for a hire.
While some search firms ask for an exclusive simply to avoid the messiness associated with competition, many search firms state as part of the exclusive relationship that ALL candidates need to funnel through their process.  So essentially you are agreeing to pay the entire fee regardless of how the hired candidate was originally identified.
So as example, if an internal employee refers a colleague for the role the search firm is representing, the search firm will assess the candidate and may present to your team for review/interview.  In this case, the search firm would get credit if the employee referral is eventually hired.  This situation also applies to candidates applying directly or through other sources (e.g. job fair, client referral, past employee, etc).
In many cases, the exclusivity also applies to individuals who currently work for your organization and apply for the role.  Promotion, demotion, and transfer candidates are considered candidates of the search firm.  
There are occasions where a company wants a search firm to own all the recruiting activity for a role; in which case an exclusive relationship makes sense.  If any of the above gives your heartburn, you can either negotiate with firms to protect certain types of candidates or you can consider other reputable search firms who aren’t as restrictive on their agreements.