Reseller agreement template

Resale, referral and agency are different models

A reseller buys and resells. It sets the end price, issues the invoice, carries the customer relationship and usually owns first-line support. Its margin is the difference between the discounted price it pays and what it charges.

A referral partner introduces an opportunity and is paid a fee, typically a percentage of first-year revenue. The vendor contracts with the customer, invoices them, supports them and owns the relationship. The referral partner's obligations end at the introduction.

An agent solicits orders in the vendor's name, and the vendor contracts with the customer — closer to referral in substance but with the agent more involved in the sale, which brings apparent authority risk.

The models carry different tax treatment, different revenue recognition, different liability and a completely different answer to who owns the customer. Running a hybrid is fine, but say which products and which motions fall into which model, and write the compensation for each separately. A single agreement that drifts between them is where disputes start.

• State the model explicitly for each product or motion
• Confirm the partner is an independent contractor with no authority to bind the vendor
• Set compensation separately for resale and referral revenue
• Say who invoices the customer and who carries credit risk

Why partners look for predictable margin

A partner deciding whether to build a practice around your product is making an investment decision, and it needs stable economics. A discount the vendor can change on thirty days' notice makes a six-month sales cycle unpriceable.

Two protections make the difference. First, discount changes should apply to new orders only, on meaningful notice — ninety days is reasonable — with registered opportunities and existing subscription renewals keeping the discount in effect when they were registered. Second, tier movements are better based on stated, measurable criteria, assessed at defined intervals rather than at the vendor's discretion.

Deal registration is the other half. A partner identifying an opportunity registers it, and if approved gets a period of protection plus an enhanced margin. For the mechanism to be trusted rather than resented, it needs four things the vendor's standard form usually omits: a stated approval or rejection deadline, typically five business days; a defined validity period with clear renewal criteria; an objective rule for competing registrations on the same account, usually first in time; and a written explanation for rejections. A registration process where deals disappear into a portal and are quietly given to the direct team is worse than none at all, because it destroys trust in the whole program.

The flow-down problem that exposes vendors

In a resale model the vendor typically has no contract with the person actually using the product. The reseller contracts with the end user, and unless the vendor's terms are required to flow down, none of the vendor's carefully drafted license restrictions, liability caps, warranty disclaimers or IP protections apply to that user.

The consequences are concrete. A user who exceeds the licensed scope, reverse-engineers the software or resells access has breached nothing the vendor can enforce. A user who suffers a loss may not be subject to any limitation of liability the vendor relies on. And the vendor's own obligations may be misrepresented by a reseller who promised service levels the vendor never agreed to.

The common approach has three parts. Attach minimum end-user terms as an exhibit and require the reseller to bind every end user to terms no less protective. Reserve the vendor's right to enforce those terms directly as a third-party beneficiary. And require the reseller to pass through the vendor's warranty exactly, with an express prohibition on making additional representations, backed by an indemnity if it does.

The alternative structure, increasingly common in SaaS, is a click-through: the end user accepts the vendor's terms of service directly on provisioning, and the reseller handles only the commercial relationship. That solves the privity problem cleanly and is worth considering wherever the product is delivered online.

Who keeps the customer when a channel relationship ends

This is the question every channel agreement has to answer and most answer badly, usually by saying nothing until the termination clause, where the vendor takes everything.

The vendor's position is that the customer bought the vendor's product and the relationship should survive the partner. The reseller's position is that it found, won and serviced the account, and losing it on termination means it was building someone else's business for free. Both are reasonable, and an agreement that simply asserts the vendor's view will either not be signed by good partners or will be signed by partners who then avoid investing in large accounts.

A workable middle ground has several parts. Live customer contracts may transfer to the vendor on termination, but the reseller is paid the margin it would have earned over the remaining committed term of each transferred contract. Customer data is jointly usable during the term, with the reseller permitted to retain its own records afterwards. And for termination without cause, a longer notice period — one hundred and eighty days rather than ninety — gives the partner time to transition.

Also address renewals during the term. A reseller that wins a customer and then loses the renewal to the vendor's direct team has effectively been expropriated, and a renewal-protection clause tied to the original registration prevents it.