By DealHub Experts 
Reviewed By Gideon Thomas Published August 17, 2023
A reseller agreement is a contractual arrangement between a supplier (vendor/wholesaler) and another party, which agrees to sell products on their behalf. The legally binding agreement outlines the respective responsibilities of each party, including product pricing, quantity limits, and sales strategies. It also sets limits on how much control each party has over marketing activities related to the product and sales process.
Companies often use resellers as a way to increase their product visibility and reach new customers. Sometimes, resellers are completely separate sources of revenue for the company (e.g., white-label products).
In any case, a reseller agreement forms a contractual relationship between the company producing the product and the one selling it on their behalf. When a company uses resellers as a part of its revenue strategy, a legal contract is essential to maintaining consistent messaging, quality, and pricing for the products a company offers.
The reseller model is incredibly advantageous for the parent company. And it creates a business opportunity the reseller wouldn’t have had otherwise. To ensure a mutually beneficial relationship, it’s crucial to iron out specifics ahead of time in a legally binding contract.
Reseller agreements are important for a few reasons:
Reseller agreements are an essential part of any partner relationship management strategy. But there are multiple variations of the reseller model. So, depending on how a company utilizes resellers, its reseller agreement will be different.
An authorized reseller (also called an authorized dealer) is an entity that has been granted permission to sell the parent company’s products. It operates as a standalone business — usually one that also sells other brands’ products.
An authorized reseller agreement is a merchandising and distribution agreement. It lays out permissions for listing, selling, and distributing products to customers.
It also gives the reseller the credentials to set up these products without the need for the parent company as an intermediary. For example, an authorized reseller for a cell phone company would need permission to set customers up with service plans. Authorized reseller agreements outline the processes for doing so.
A white-label reseller (or private-label reseller) is a company that sells products under its own brand name instead of the parent company’s. The products are actually produced by the parent company but branded and marketed as if they were created by the reseller.
A white-label reseller agreement is a manufacturing and distribution agreement. It outlines the steps for branding, packaging, distributing, and advertising products that another organization actually produces.
Some white-label reseller agreements allow the reseller to state they use parts or equipment from the parent company. That way, customers know their products come from a reliable source while still being affiliated with the reseller brand. Some parent vendors find this tarnishes their reputation, so they keep it under wraps.
White-label reseller agreements also include limitations regarding the use of trademarks or copyrighted material from both parties — as the parent company doesn’t want its brand associated with any unauthorized products, and the reseller doesn’t want to be accused of copyright infringement.
A software reseller is a company that either sells a white-label SaaS product or licenses software from a vendor to resell it as its own.
A software reseller agreement is primarily an intellectual property licensing agreement. It typically includes restrictions on:
The agreement also defines the relationship between the software vendor and reseller. Depending on how much freedom the reseller has, it may range from a simple commission system to a full-fledged joint venture agreement.
Service resellers are agencies and professional services firms that use white labeling for some or all of their service offerings. It’s most widely used for productized digital services like SEO and PPC ads — more specifically, full-service digital marketing agencies.
Being a reseller allows them to offer a complete suite of services without building the complicated infrastructure to run it in-house. For example, a digital marketing agency might offer SEO audits as part of a web design package. Since SEO isn’t their main line of business, they send their clients’ info to a reliable SEO partner, which can create them in less than an hour.
A service reseller agreement is a sub-licensing agreement that follows a white-labeling scheme to some degree. It outlines:
Service reseller agreements are somewhat more complicated than many others. Services are inherently more complicated than prepackaged software or products, so the agreement needs to define the terms of collaboration and payment clearly.
Any of the above agreements can also be a non-exclusive reseller agreement. A non-exclusive distribution agreement allows a supplier to work with multiple resellers in the same territory or market. It’s a good option for companies looking for more coverage or to expand their market presence to multiple geographies.
In a non-exclusive agreement, the parent company can explore new opportunities and find other partners without being limited by exclusivity clauses. It also gives resellers the chance to work with competitors if they want better terms or access to a different pool of resources.
At the same time, it’s important to be careful and thoughtful about non-exclusive agreements. For instance, resellers don’t always have incentive to promote products if they know the parent company is working with other resellers in the market. This can lead to conflicts, so companies should clearly define their expectations when drafting their agreements.
A master reseller is a reseller with overarching control of smaller ‘general resellers’ below them in the distribution chain. They have more authority than regular resellers and are typically responsible for things like training, support, pricing, performance metrics, and customer service.
Master resellers usually have different sub-distributors underneath them who can resell their products. So they don’t always need to be the ones working directly with customers — they just need to manage their sub-distribution network, making sure all resellers are playing by the rules and delivering quality customer service.
A master reseller agreement includes the master’s responsibilities for managing products at all levels of the distribution chain, which are completely different from normal reseller responsibilities. It also outlines how the master reseller will be compensated for their services, as they may have an extra commission or fee structure in place. In some cases, they may have revenue share for contributing so much.
An executive reseller or distributor is someone who has 100% exclusive rights to sell a product or service within a given territory. They’re responsible for all sales and customer service for their region and any marketing campaigns they take on.
An exclusive reseller agreement grants the right of exclusivity to said reseller, limiting other companies from selling the same products within the agreed-upon geographic region. It also includes terms on how the reseller will be compensated for their services, as well as delivery times and service level agreements. It also outlines what happens if something goes wrong or the agreement is breached.
Exclusive reseller agreements are beneficial when a company wants to establish itself in a new market but is not yet ready to set up its own business there. It also helps build customer loyalty, as customers recognize the exclusive reseller is the only one to buy a particular product or service from.
A value-added reseller (VAR) is someone who takes existing products and adds to them to make them their own. They can upgrade, customize, or even repackage the product to create something that exceeds the customer’s expectations.
A VAR agreement outlines how much freedom the reseller has when it comes to modifying the product. It also defines what support they can expect from the parent company, any warranties offered on the product, and how much control they can have over pricing.
A VAR agreement benefits companies looking to bolster their value proposition to customers without having to build something from scratch. It also allows the company to leverage existing products and services while expanding its market presence.
Practically every department uses reseller agreements in some regard. As companies increase the scope of their reseller programs, it becomes even more important to keep all teams informed of any changes, updates, or new agreements.
Reseller agreements have major legal implications for both sides. How significant these implications are depends on what happens when either party fails to hold up their end of the bargain. It also depends on how severe the breach in contract is.
Entire agreement — A provision stating that the agreement constitutes the entire understanding between the parties, superseding any previous agreements or discussions.
Distributor and reseller agreements are sometimes the same contract. The difference is that distributors typically purchase products in bulk directly from the manufacturer or parent company, while resellers don’t always. Distributors cover broader geographic areas and are usually responsible for warehousing, inventory management, and shipping. Resellers may be exclusive or non-exclusive product or service providers in their respective areas, with the parent company taking care of logistics.
A reseller agreement is a contract between a company and an individual or business to act as a third-party agent, selling the company’s products or services in exchange for a commission. A partnership agreement is typically used when two or more companies form a joint venture to share resources, capital, personnel, profits, and losses. While there may be some overlap between the two agreements, each has a distinct purpose.
The reseller process typically begins with a company and individual or business agreeing to the terms of an official reseller agreement. The agreement outlines the parties’ respective roles, rights, and obligations. Once decision-makers sign the agreement, the reseller can sell the company’s products or services in exchange for a commission.
A software white-label agreement is a contract between two entities where one entity, the licensor, grants the other entity, the licensee, permission to brand and distribute their product as if it were their own. This type of reseller agreement often includes customization options like tailor-made branding and features. In exchange for these rights, the licensee pays a fee to the licensor.
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