With advancing technology, value-added reseller agreements have become prevalent methods for increasing software companies’ sales opportunities and providing more diverse products for end users. If you are looking to expanding your product reach, a value-added reseller agreement might be the right move for your company. By understanding the basics of these agreements, you can decide whether a value-added reseller system could improve your distribution system and take your business farther.
What is a Value-Added Reseller Agreement?
In the world of software, a value-added reseller agreement is a contract under which a value-added reseller (VAR) buys a software product from a supplier, makes certain additions to the software product, then resells the combination product as its own. Often, VAR agreements include enhancement services to a product, like installation, monitoring, and troubleshooting, or feature a related product that improves end-user experience.
What is Included in a VAR Agreement?
A VAR agreement spells out the conditions that each party must fulfill and directs the relationship between the VAR and the supplier. Certain issues need to be addressed in every VAR agreement to make sure all parties are clear about the terms. These include:
- Limitations on the geographical coverage area for the agreement;
- Specification of the duration of the agreement;
- Detailed specifications of the product from the supplier and the product or service to be provided by the VAR;
- Descriptions of the combined product to be sold or licensed to end users, including limitations on use and rights of ownership;
- Requirements and limitations on marketing of the combined product or services;
- Details of the licensing agreement to be extended to end users;
- Specifications regarding exclusivity;
- Provisions for relief in the event of breach or intellectual property infringement; and
- Provisions for termination of the agreement.
This list is not exhaustive. The parties to these agreements need to be well represented to ensure their interests are protected, and to set the appropriate groundwork for the business relationship to succeed.
Why Consider a VAR Agreement?
VAR agreements provide sales and licensing opportunities for both the supplier and the VAR. VARs are valuable channels for distribution of software products and enable suppliers to reach many end users without having to maintain certain aspects of performance, like updates and troubleshooting. The agreements can quickly diversify a product line without sacrificing testing and development resources.
VAR agreements also allow service companies and owners of companion products to capitalize on the branding of well-established software while creating a corner for their own businesses. A VAR agreement usually comes with significant discounts on the underlying product, which means more room for profits down the line.
If you are considering a value-added reseller agreement, either as a supplier or a value-added reseller, contact Larsen Law Offices, LLC, today. Larsen Law will explain how a VAR agreement could benefit your company and will help you negotiate the most favorable contract. You can schedule an initial consultation with attorney Susan Larsen by calling (303) 520-6030.