When engaging a reseller to sell your software as a service (SaaS), the reseller takes care of the marketing and selling within a particular territory. A SaaS reseller agreement allows you to focus on improving your SaaS and developing new products. It is essential that your agreement is comprehensive and covers all necessary details. This article outlines some key terms to include in your SaaS reseller agreement to protect your interests and maintain a good relationship with the reseller.

Communication and Specifications

Creating an open working relationship and maintaining constant communication with the reseller is paramount. To ensure both parties are kept up-to-date, both you and the reseller can appoint a specific person to manage the relationship. You should also encourage the reseller to reach out to discuss any issues early on to avoid matters snowballing into disputes.

When negotiating the terms of the resale, ensure the reseller agreement outlines any specific details of reselling the SaaS. Doing so allows both parties to be aware of any specifications in the agreement and hopefully avoid any future misunderstandings.

Intellectual Property

The reseller will require access to your intellectual property (IP) including software licences and licences to use your trade marks. You may want to limit how the reseller can use your IP to market and promote your SaaS to ensure it is in line with your brand. The IP clause in your agreement should assert that you are not assigning your IP rights to the reseller, but only providing them with a licence. It should also ensure that the SaaS reseller assigns any modification or enhancement of your IP to you. Moreover, you should prohibit the reverse engineering of your software by the reseller or their customers.

In turn, you should also seek permission to use the reseller’s IP so you can advertise them as an affiliate.

No Conflict, Competition or Solicitation

It is in your best interests for the reseller to sell your SaaS to as many customers as possible. Restricting the reseller from selling competing products can assist sales of your SaaS. Further, you should prevent the reseller from engaging in work that conflicts with the sale of your SaaS. Your agreement should also require the reseller to notify you of any conflicts and have a procedure for resolving disputes.

To further protect yourself from unwanted and unfair competition, you should make it clear that the reseller cannot:

  • contact your suppliers (if the reseller contacts your suppliers, it may disrupt your already established relationship with them); and
  • solicit your customers (for the duration of your agreement and for a term following the conclusion of the SaaS reseller agreement).

SaaS Reseller Agreement Obligations

Your SaaS reseller agreement should place obligations on the reseller to ensure the arrangement is favourable for you. For example, you want to protect yourself from the reseller damaging your reputation. Otherwise, the relationship may cause you to lose more than you gain. Therefore, the agreement should ensure the reseller undertakes due diligence and acts appropriately to safeguard your interests.

You should also protect yourself by limiting your liability, and ensure the reseller:

  • can enter the agreement;
  • will comply with laws and licences;
  • has and will maintain the necessary insurances;
  • will not provide any representations or warranties other than those agreed upon in writing as part of the reseller agreement; and
  • will take reasonable steps to meet the demand for your SaaS and deliver your SaaS within the allocated territory.

You should also seek an indemnity from the reseller for any acts or omissions that contravene the agreement, as well as any unauthorised representations or warranties given by the reseller. There should be a clear option for you to terminate the agreement if necessary. Further, the agreement should place an obligation on the reseller to help with the transition of accounts so you can take over managing customers upon termination of the agreement.

Payment

The SaaS reseller agreement should include detailed payment terms so you can rely on them if there are any disagreements. Generally, a reseller will collect the money from customers and the supplier will invoice for the amount due. The agreement should detail:

  • who is responsible for chasing up a customer if they fail to make a payment and whether this affects your right to invoice for your cut; and
  • what happens if a reseller is late in passing on the payment from a resale to you. For example, you may wish to charge interest on overdue amounts and if the late payments continue, eventually terminate the agreement.

Further, the reseller should keep detailed records to ensure they are properly paying you for your SaaS.  You should be allowed to audit their books and receive reasonable assistance from the reseller to do so, upon providing them with notice.

Key Takeaways

As a SaaS supplier engaging with a reseller, you should ensure you have a comprehensive SaaS reseller agreement. Your agreement should be specific in details related to your IP, conflicts of interest, competition and payment. This will ensure your interests are best protected and minimise the chance of disputes.

If you have any questions or need assistance with drafting your SaaS reseller agreement, get in touch with one of LegalVision’s IT lawyers on 1300 544 755 or fill out the form on this page.

Jacqueline Gibson
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