Why use a reseller agreement?
A good reseller agreement protects your business by clearly setting out the rules between a supplier and a reseller to market and resell the supplier’s products in a particular territory. It can help a supplier boost sales without the need to have a physical presence or local knowledge, and all the additional costs and risks that setting up in a new territory usually entails.
A reseller agreement can also help resellers to 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?
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.
What are benefits of using a reseller agreement?
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 a reseller agreement should include?
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; and
- the protection and rights to use IP and confidential information.
Exclusivity: This reseller agreement template contains three different types of appointment 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.
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.
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 to 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 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. Our Supply of Services Agreement template can be found here. Please note, 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. Our Software as a Service Agreement template can be found here.
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. Our Distribution Agreement template can be found here.
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Tags: reseller agreement, reseller agreement template, reseller, resale of services, resale of software.