When reselling software as a service (SaaS) you are selling another business’ product in line with a SaaS reseller agreement. As a SaaS reseller, it is important to ensure you understand the terms to sell the SaaS. Before signing the agreement, you should carefully read it to ensure it reflects your expectations. This article outlines key considerations and clauses in the reseller agreement of which you should understand. You may need to negotiate these clauses with the supplier.
Exclusivity and Territory
As a SaaS reseller, you want to ensure that you are clear about where you can sell the SaaS. Typically, a SaaS reseller agreement will specify a territory or market sector where you have exclusive resale rights. You should ensure that the territory covers an area you think will be both profitable and convenient for sales.
The ease of delivering and accessing the SaaS over the internet is beneficial. The internet allows you to cover an extensive sales territory without too many delivery costs. Whether you are delivering to a customer in Sydney or Broome, your delivery costs should be the same. Consequently, it is often valuable to negotiate a large resale territory with your SaaS supplier.
Responsibility for Delivering the SaaS
It is essential to establish and agree on who is responsible for delivering the SaaS. There are two main options for delivery; the supplier can either:
- provide you with the SaaS to then pass on to your customer; or
- directly make the delivery as per an agreement with your customer.
Being clear about this arrangement allows you both to avoid confusion about delivery and provide customers with a seamless experience.
It is also important to note who bears liability for any errors with the delivery. For example, if the supplier delivers to you and you then deliver to the customer, who is responsible for a mistake? It is likely that you are responsible for:
- any errors as a result of your server or operating system;
- any viruses or damage that occurs on the transfer of the SaaS to you; and
- delays in delivery from the time that you receive the SaaS to the time of delivery to the customer.
Bundling the SaaS with Your Products
As a SaaS reseller, you may also resell similar products that can complement the supplier’s SaaS. Bundling your products with the SaaS may offer more value to customers and also operate as a sales strategy. However, you should check your reseller agreement before bundling products because a supplier may limit the resale of their SaaS to the SaaS alone.
You usually require written permission from the supplier to bundle the SaaS with other products. Therefore, you should consider negotiating to sell the software as a bundle, before signing the agreement. Doing so may prove to be more valuable to both you and the supplier.
Conflicts of Interest and Non-Compete Clauses
You also need to consider other products you sell, as a reseller agreement is likely to restrict your ability to sell competing products. It may also prevent you from interacting with the SaaS supplier’s client base and their suppliers. However, it should not completely restrict you from selling other products or engaging in other business. Keep this in mind when taking on new products.
It is likely that your reseller agreement will also include a non-compete clause. A non-compete clause will restrict you from disrupting any relationship between your SaaS supplier and their suppliers. You will not be allowed to solicit their clients. It is also likely that the supplier will have ownership of the customer accounts within your territory when the agreement is terminated.
Successfully Reselling the SaaS
To successfully use and resell the SaaS, the supplier should provide you with a software licence. The supplier should also provide specifications on how you can market, price and supply warranties for the SaaS. To effectively market and advertise the SaaS you should obtain a licence to use the supplier’s trade marks.
To sell the SaaS, you will also need to understand the SaaS you are reselling. Typically, a reseller agreement will include support and training provided by the supplier. It is in your interests, and those of the supplier, as training and support will enhance your sale skills and hopefully lead to an increase in the percentage of sales. It will also help to ensure you market and present the SaaS as per the supplier’s specifications, reducing the likelihood of disputes. The specifics of the training provided should be set out in a schedule to the agreement.
If you plan on reselling SaaS, you should carefully read and understand the SaaS resale agreement. It is important to ensure the terms of the agreement are clear and to negotiate any terms to best protect your interests.
If you need assistance reviewing or negotiating terms in 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.
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