Why use a reseller agreement template?
Opting for a well-written reseller agreement template is crucial for protecting your business interests. This agreement outlines the rules between a supplier and a reseller concerning the marketing and reselling of the supplier's products within a specific territory. This contractual arrangement empowers suppliers to boost sales of particular products without the need for physical presence or local knowledge in new markets. This also reduces all the additional costs and risks that setting up in a new territory usually entails.
A reseller agreement can also help resellers increase profits by reselling products through their established sales channels without the need to manufacture or develop the products.
A reseller agreement can reduce the risks for suppliers, as once the products have been sold to the reseller, the reseller will in most cases be contracting directly with the end-customer. It will also clarify if any other companies have the right to resell the products to customers and give the supplier full control over its products.
What is a reseller agreement template?
A reseller agreement outlines the rights and responsibilities between a supplier and reseller to resell products in a certain geographical location. A reseller is a company that resells a supplier's products to customers. In most cases, the supplier will often be the product owner, manufacturer or developer. Once a reseller agreement is signed by both parties, the reseller will enter into a separate supply agreement with the end-customer to resell the supplier’s products.
To find out more about reseller agreements with real-life examples of when they may be used, check out this guide created by our legal experts.
What are the benefits of using Docue's reseller agreement template?
To market the products and protect your interests: A company’s ability to sell its products and services will often be instrumental to its success. Appointing a reseller to resell products can help to increase sales and build a supplier’s customer base through new channels. This type of arrangement can be advantageous for both a supplier and a reseller to profit from the products and reduce risks on both sides.
To reach new markets and reduce costs: Resellers will often already have knowledge of their target market and have access to established sales channels to resell the products. A reseller can enhance a supplier’s reach to new customers without the need for local market knowledge in the territory. This will be more cost-effective for a supplier as it will not need to incur the costs of building a physical presence in the territory, such as incorporating a new entity and hiring employees.
To protect confidential information and intellectual property: An organisation's intellectual property (“IP”) is often one of its most valuable assets. It is important to ensure that both parties’ IP and confidential information is protected when entering into a contractual relationship. A reseller agreement can ensure both parties’ existing IP is protected and also set out if the parties can use each other’s IP to resell the products.
What are the key terms that this reseller agreement template includes?
Key clauses: This reseller agreement template contains key provisions in relation to:
- where the reseller can resell the products;
- if the arrangement will be non-exclusive, exclusive or if the reseller will have sole rights;
- restrictions and obligations on the reseller;
- charges and payment terms;
- limitations of liability;
- the protection and rights to use IP and confidential information; and
- governing law and jurisdiction.
If you're creating your own reseller agreement, check out our top 7 tips in this blog.
Exclusivity: This reseller agreement template contains three different types of appointment rights that can be selected through the optional clauses:
1. Non-exclusive - appointing a reseller on this basis gives the supplier the most freedom as the supplier can continue to appoint other resellers to resell the products in the territory.
2. Sole rights - this is less restrictive on the supplier than non-exclusive rights as the supplier cannot appoint any other resellers, however, the supplier can still sell products in the reseller’s territory.
3. Exclusive - this is typically the most favourable type of appointment for the reseller as the supplier cannot appoint any other resellers in the territory, nor can it sell the products directly to customers in the territory.
Our legal experts provide a deeper insight into these different types of appointments in this blog.
This reseller agreement template can be used for B2B arrangements between a supplier and reseller, where both companies are incorporated in the UK. Please note, this template assumes English law applies.
UK Competition Laws
There are certain laws in the UK that make it illegal for businesses to behave in a way that could limit competition and trade. The Competition Act 1998 prohibits agreements and arrangements between businesses that restrict competition in the UK (unless they meet the conditions for an exemption, see VABEO below). These laws are policed by the Competition Markets Authority (CMA).
The consequences of failing to comply with UK competition law can have significant implications for a business and its directors, for example:
- The agreement can be deemed unenforceable.
- Fines of up to 10% of the company's global turnover for the previous financial year.
- Personal liability for company directors, such as criminal prosecution and/or disqualification.
Some examples of anti-competitive behaviour include:
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Price-fixing: this is an agreement between two or more companies to fix prices, which can lead to consumers paying more for goods or services. Instead, recommended or maximum prices can be agreed upon, provided that it does not actually lead to fixed unit pricing.
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Market sharing: this is an agreement between companies to divide up the market and not compete with each other in certain areas or with certain customers, which can limit consumer choice and lead to higher prices.
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Bid-rigging: this is an agreement between companies to coordinate their bids for a contract, which can result in higher prices and less competition.
What is The Competition Act 1998 (Vertical Agreements Block Exemption Order) 2022 (VABEO)?
The VABEO is a set of rules that regulate certain types of agreements between businesses operating at different levels of the supply chain in the UK (such as reseller agreements). The VABEO provides an automatic block exemption from certain competition laws in the UK on the basis that certain conditions are met, such as:
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Market share: each party's market share must be below 30%; and
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Hardcore restrictions: the agreement must not contain "hardcore restrictions" (e.g. price fixing, etc.).
This means that under VABEO an agreement between a supplier and a reseller may be exempt from certain provisions of UK competition law if it meets the relevant criteria and does not harm competition.
The VABEO also includes certain obligations that must be carried out, such as an obligation to provide any information requested by the CMA. It's important for businesses to understand and comply with VABEO if they are involved in vertical agreements. For more information, check out the CMA's VABEO guidance.
Jurisdiction of UK Competition Laws
Since Brexit, the UK now has its own system for governing vertical agreements such as distribution agreements. Although the UK’s VABEO has taken an approach that is similar to the EU Vertical Block Exemption Regulation, there are notable differences between the two regulations. As the EU and UK have separate regimes for governing vertical agreements, this template is drafted in compliance with UK rules and does not take into account considerations of another jurisdiction’s competition laws. Therefore, if this template is used in another jurisdiction, it may not be compliant with the laws of that jurisdiction.
Docue gives you options to tailor this reseller agreement template to meet your needs
Customised for your business: This reseller agreement template contains alternate clauses depending on whether you are the supplier/manufacturer of the products (known as the company) or the reseller.
Pro-reseller terms: In the pro-reseller optional terms, you have the option to select terms that are more favourable for the reseller. Choosing the pro-reseller terms in the template will help you steer clear of limiting the ways in which the reseller can market and resell the products.
Pro-supplier terms: Alternatively, if you choose the pro-supplier/company optional terms, the supplier is able to choose how strict or relaxed the obligations of the parties will be and also include a minimum quantity of products that must be purchased by the reseller. A list of “reserved customers” can also be included to allow the supplier to sell the products to certain customers in the territory even where the reseller has exclusive rights.
Other templates and supply of services agreements
When should this reseller agreement template be used: This reseller agreement template should be used where a supplier or manufacturer is looking to appoint a reseller to resell products (such as software) in a particular territory.
When should the supply of services agreement template be used: The products that are sold under the reseller agreement will be governed by their own terms and conditions that are separate from the terms of the reseller agreement. A supply of services agreement will contain the commercial terms and conditions relating to the products, whereas the reseller agreement defines the arrangement between the supplier and reseller to resell the products. Check out our Supply of Services Agreement template. Please note that if the products will consist of software, please see the below paragraph.
When should the software as a service template be used: If the products that are being resold consist of software, a software as a service agreement template would be suitable to govern the terms between the reseller and customer. Check out our Software as a Service Agreement template.
When should the distribution agreement template be used: If the products being resold consist of goods rather than software or services, the template distribution agreement would generally be more appropriate. Check out our Distribution Agreement template.
Why Docue?
Simplicity: We believe that creating a reseller agreement should be a straightforward and hassle-free task. With Docue, you can bid farewell to the days of grappling with complex legal jargon and the overwhelming process of drafting an agreement from scratch. Our user-friendly interface and intuitive tools ensure that you can easily create a high-quality reseller agreement template that fits your business needs. Best of all, At Docue, we believe in transparent and cost-effective pricing without any hidden fees, check out our pricing here.
E-sign: With Docue, you can collect signatures electronically - no more chasing down physical signatures in wet ink. Our secure electronic signature feature allows you to get agreements signed swiftly, enabling you to seal deals and initiate partnerships with ease.
Storage: You can save your signed documents in your very own secure storage vault on our platform, ready to be retrieved whenever you need them. Multi-factor authentication and user privilege access settings can be implemented with a click of a button.
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