Strategies for channels, partners and VARs
09 - 09 - 2019
Business Lifecycle Support
For many of our clients, the routes to market are varied – they might go direct to market, but there may be more value in other routes. These can be pure resellers, who might be selling other solutions as well; through combining products into a package, integrating through APIs – generally as VARs (Value Added Resellers); or white labelling. Or combinations or variations on these. Often – confusingly in terms of legal status – the resellers are described as partners. Partnership is something very specific in legal terms, so describing a company as a partner in a legal agreement often has to be negated in the small print – otherwise you’re in a different world of liability.
One of our clients is a London-based software company with a SaaS product, who entered into a partner agreement with a US reseller, where the agreement was largely produced by the reseller. It worked for the reseller’ It certainly didn’t work for our client. As part of our clients drive to growth, we have become involved to extricate them from it, and produce a document which works for them, because the agreement in place severely hampered their ability to expand their market.
Several areas which can easily be overlooked, and in the case we’ve mentioned, some of them had been. If the agreement is exclusive in a particular country, and the reseller doesn’t perform, what can you do? Should you grant exclusivity; and if it’s right to do so, but the reseller doesn’t perform, at what point can you terminate the agreement, or withdraw exclusivity?
- You should have rights of reporting and audit on sales and activity, and remedies if the reseller doesn’t perform.
- You need to retain rights to protect your own intellectual property, and make sure the reseller doesn’t compromise that (especially if the reseller is licensing a combined product or service).
- You need to make sure the reseller doesn’t register trademarks which cut across your future plans or growth.
- You need to make sure the reseller can’t land you with liability to which you haven’t agreed, or beyond limitations you can accept.
- You need to ensure that data protection compliance is intact, especially if this is outside the EU – such as the USA.
- You need to consider if your own terms of business apply as between you and the end user, or the reseller’s terms apply – and that you can control what the reseller offers and any concessions they make in negotiations.
A VAR/Partner relationship is a delicate one, and the balance has to be right – the reseller needs to be well supported and incentivised, but it’s your product/service, and you have to maintain the right balance of control and oversight. If, for instance, this is how you want to open up new markets, then properly documenting this relationship is a vital building block.