Value Added Reseller Agreement
A Value Added Reseller (VAR) Agreement is a legal contract between a software developer and a reseller that outlines the terms for the reseller to enhance, market, and sell the software, including responsibilities, pricing, intellectual property rights, and support obligations, ensuring a structured and mutually beneficial partnership.
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Value Added Reseller Agreement
What is it
A Value Added Reseller (VAR) Agreement is a legal contract between a software developer (or vendor) and a reseller who adds value to the original software by incorporating additional features, services, or customizations before selling it to end-users. This agreement outlines the terms and conditions of the resale relationship, including pricing, payment terms, and the scope of the reseller’s rights to modify and enhance the software. It specifies the responsibilities of the VAR, such as providing additional services, marketing efforts, and customer support, as well as the developer’s obligations, like supplying the core software, technical support, and updates. The agreement also covers important aspects such as confidentiality, intellectual property rights, quality standards, termination conditions, and dispute resolution. By clearly defining these elements, the Value Added Reseller Agreement ensures a structured and mutually beneficial partnership, facilitating effective distribution and enhancing the value provided to end-users.
Why is it important
Value Added Resellers (VARs) are important for several reasons:
Enhanced Products and Services: VARs enhance existing products or services with additional features, customized solutions, or complementary products, providing greater value to end customers.
Market Expansion: VARs help manufacturers and suppliers reach new markets and customer segments that might be difficult to access directly, expanding the overall market presence.
Customer Relationships: VARs often have established relationships and trust with their customer base, making it easier to introduce and sell new products or services.
Specialized Expertise: VARs bring specialized knowledge and expertise in specific industries or technologies, allowing them to tailor solutions to meet the unique needs of their customers.
Improved Customer Support: VARs provide localized support and services, ensuring customers receive timely assistance and a higher level of service, which can enhance customer satisfaction and loyalty.
Increased Sales and Revenue: By adding value and differentiating products, VARs can drive higher sales and generate additional revenue streams for both themselves and the original manufacturers.
Efficient Distribution: VARs facilitate efficient distribution channels, reducing the burden on manufacturers to manage logistics and distribution, and enabling faster delivery of products to customers.
Overall, VARs play a crucial role in the supply chain by adding value, expanding market reach, and enhancing customer experiences, leading to greater success for both the original manufacturers and the resellers.
When is it needed
Value Added Reseller (VAR) Agreements are needed in the following scenarios:
Enhancing Products and Services: When a company wants to offer customized solutions or additional features that enhance the base product or service, leveraging the specialized expertise of VARs.
Expanding Market Reach: To enter new markets or customer segments that might be difficult to access directly, utilizing the established relationships and market presence of VARs.
Providing Specialized Solutions: When customers require tailored solutions that integrate multiple products or services, VARs can offer the expertise to create comprehensive and customized offerings.
Increasing Sales and Revenue: To boost sales and generate additional revenue streams by offering value-added services that meet specific customer needs and justify higher pricing.
Improving Customer Support and Service: When a company aims to provide localized support and services, VARs can offer closer, more personalized customer service, enhancing overall satisfaction.
Leveraging Industry Expertise: In industries where specialized knowledge is critical, VARs bring the necessary expertise to customize and implement solutions effectively, addressing unique industry requirements.
Facilitating Complex Implementations: For complex product implementations that require significant customization, integration, or installation, VARs can manage these processes efficiently.
Building Brand Loyalty: When a company wants to build stronger relationships with customers through enhanced offerings and personalized service, VARs can help foster loyalty and long-term partnerships.
Reducing In-House Burden: To alleviate the workload on the company’s internal teams, allowing them to focus on core competencies while VARs handle the additional value-added services and support.
Meeting Competitive Challenges: When facing competition, offering value-added solutions through VARs can differentiate a company’s products and services, making them more attractive to potential customers.
In summary, VAR Agreements are needed to enhance product offerings, expand market reach, provide specialized solutions, improve customer support, and increase sales and revenue, leveraging their expertise and market presence to deliver greater value to customers.
Key Provisions
The key provisions in a Value Added Reseller (VAR) Agreement include:
Definitions: Clearly defines key terms used in the agreement, such as "VAR," "products," "services," and "end user."
Grant of Rights: Specifies the rights granted to the VAR, including the right to market, sell, and provide value-added services for the supplier's products within a defined territory or market segment, and any exclusivity clauses.
Scope of Value-Added Services: Details the additional services the VAR will provide, such as customization, integration, installation, training, and support, distinguishing them from the basic product offerings.
Responsibilities of the VAR: Outlines the VAR's obligations, including marketing efforts, sales targets, inventory management, customer support, and compliance with the supplier’s branding and quality standards.
Pricing and Payment Terms: Details the pricing structure for the products and value-added services, payment terms, discounts, and any minimum purchase requirements.
Order and Delivery Procedures: Specifies the process for placing orders, delivery timelines, shipping terms, and risk of loss during transit.
Intellectual Property: Defines the terms for the use of the supplier’s trademarks, logos, and other intellectual property, ensuring it is used correctly and only as authorized.
Confidentiality: Includes clauses to protect confidential information shared between the supplier and the VAR, ensuring it is not disclosed to third parties without permission.
Performance Targets and Reporting: Sets sales targets, performance metrics, and reporting requirements, ensuring the VAR meets specific sales and service goals and keeps the supplier informed of progress.
Support and Training: Outlines the support and training that the supplier will provide to the VAR to help them effectively sell, customize, and support the products and services.
Warranty and Returns: Specifies the terms of product warranties, return policies, and procedures for handling defective products.
Compliance with Laws: Requires the VAR to comply with all relevant laws and regulations, including advertising standards, anti-bribery laws, and industry-specific regulations.
Term and Termination: Defines the duration of the agreement, conditions for renewal, and the conditions under which either party can terminate the agreement, including notice periods and consequences of termination.
Indemnification: Specifies that the VAR will indemnify the supplier against any claims, damages, or liabilities arising from the VAR’s actions or breaches of the agreement.
Dispute Resolution: Establishes procedures for resolving disputes between the supplier and the VAR, such as mediation or arbitration, to avoid litigation.
Governing Law: Identifies the legal jurisdiction under which the agreement will be governed and interpreted.
Amendments and Modifications: Describes the process for making changes to the agreement, requiring mutual consent from both parties.
These provisions ensure a clear, structured, and legally compliant framework for the VAR relationship, protecting the interests of both the supplier and the VAR and fostering a successful partnership.