Software Reseller Agreement: What is it? What to Include
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What is a Software Reseller Agreement?
A software reseller agreement is a legal contract between a software publisher and reseller. The agreement specifies the rights and responsibilities of each party involved in reselling the software to third parties.
Sometimes referred to as a software distribution agreement, this type of licensing agreement is created set clear legal and business terms on the obligations of both parties.
Third parties reselling software is not a new concept and it is key to make sure all terms are clearly outlined to ensure a successful relationship. Missed communication, poorly defined requirements, or loopholes could threaten even the best software resale deals, which is why it is always recommend to consult a technology lawyer when drafting or negotiating these types of agreements.
This is an article about getting the most from your software distribution agreement.
How Do You Structure a Software Reseller Agreement?
A reseller agreement for software can be structured as exclusive or non-exclusive.
- Exclusive Software Reseller Agreement: a software reseller agreement in which the reseller is the only entity legally allowed to resell or distribute the software, including the publisher and any of the publisher’s other resellers. However, it is common for an exclusive arrangement to be limited by a geographical area or industry.
- Non-Exclusive Software Reseller Agreement: Most mainstream software reseller agreements are non-exclusive. In these arrangements, the publisher is free to permit other resellers to sell the same software.
What’s Included in a Software Reseller Agreement?
Depending on the complexity, a software reseller agreement could include more specific topics, but at a minimum, it should include:
- Applicable Law: There are some cases in which the publisher and reseller are in different countries. In these especially, there is a need to define under which jurisdiction the laws governing the agreement will be based.
- Ownership Terms: As mentioned above, a software reseller agreement can be exclusive or non-exclusive. The publisher is the one who decides which type of agreement they want to offer, and it sometimes varies among individual sellers.
- Intellectual Property Rights : Intellectual property rights are one of the trickiest, but most important points in a software reseller agreement. Suppose a reseller does not have express permission to use the trademark, or copyright. In that case, they could face copyright infringement or trademark infringement charges if there is a breach.
- Payment Terms: As with many legal agreements, the financial terms should also be delineated in the software reseller agreement. If you are a reseller, this is the part you want to pay attention to. It will outline how you will be compensated.
- Software Maintenance/Updates: Make sure you have support after the agreement. If you don’t, you could be left hanging once the agreement is signed. Typically, the SaaS publishing company is responsible for updating and maintaining software throughout the contract's lifetime. A schedule should be included.
- Additional Services: As a reseller, if you will be responsible for end-user training, you’ll want to know ahead of time and be compensated accordingly. This should be agreed upon at the start and outlined in the software agreement.
Here is an article about some of the top software resellers in the market, according to users.
How Does a Software Reseller Agreement Work?
To set up a software reseller agreement, there has to be an interested party, the reseller, and a producing party, the publisher. The rest is a series of steps.
- Meet with the software publisher to get a feel for the product and answer any initial questions.
- Review terms and outline notes to prepare for the next meeting.
- Meet with the publisher again and negotiate the distribution terms.
- Hammer out the deal's details, such as promotional literature, patent or trademark information, payment information, and generally expected duties of both parties.
- Consult a licensed lawyer to help draft the agreement.
- Time to sign or take this last chance to renegotiate any contract terms.
- If signed, you can now execute the agreement as outlined.
Here is an article about building a SaaS reseller business model.
Image via Pexels by Christina Morillo
Types of Software Reseller Agreements
There are three main types of reseller agreements: top-down, bottom-up, or the less common, three-party.
Top-Down Agreements
Suited for a more high-value customer or SME, top-down agreements spell out how the reseller contracts with customers. This usually takes the form of an agreed-upon schedule, and they are expected to include standard compliance provisions, such as:
- Anti-bribery
- Audit
- Information security
- Record-keeping.
Bottom-Up Arrangements
This arrangement may be necessary when working with a larger corporate customer. Still, in a nutshell, bottom-up agreements are a product of active negotiations between the customer and the reseller. While they may not work in every situation, they create a win-win for both publisher and seller.
Three-Party Contracts
A less popular form, the three-party contract, happens when a publisher wants to act as an intermediary between reseller and customer. While not impossible to work with, this arrangement is a bit improbable. Moreover, even with all of the stars aligned, agreements of this nature are complex and expensive undertakings.
Here is an article about reseller agreement formats.
Typical Payment Terms for Reseller Agreements
The most common payment terms for reseller agreements are margin, commission, or subscription.
- Margin: with margin-based payment terms, the reseller would purchase the original product and resell it for more than the purchase price. The difference between what the reseller paid and what they sold it for is called margin and represents the profit made per product.
- Commission: commission-based payment terms would be based on a license fee paid to the publisher, by the end-user. This is similar in set-up to a sales agent’s commission and is commonly used in a SaaS agreement.
- Subscription: this is one of those situations where knowledge can keep you out of trouble. If there is a subscription payment model for the end-user, what part of that payment is due to the reseller? This is different for every agreement; make sure it is part of your review checklist.
Here is an article about how to determine your reseller margins.
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Daehoon P.
Daehoon P.
Corporate, M&A & Securities Lawyer | Managing Attorney, DP Counsel PLLC Practice Areas: Business Formation | Commercial Contracts | Contract Drafting & Review | Mergers & Acquisitions | Venture Capital | Securities Offerings | Franchise Law | Employment & Equity Compensation | Intellectual Property | Cross-Border Transactions About/Bio: I represent companies, investors, and fund sponsors in corporate transactions, commercial contracting, and private securities matters, from entity formation and early-stage financings to acquisitions, exits, and ongoing strategic counsel. As Managing Attorney of DP Counsel PLLC, I help clients structure transactions clearly, allocate risk thoughtfully, and move deals forward with documentation that is practical, enforceable, and aligned with business objectives. My practice includes both day-to-day commercial matters and more complex transactional work, including venture financings, private offerings, M&A deals, fund-related documents, and cross-border structuring. What I Do: Corporate & Commercial • Entity formation and structuring for corporations, LLCs, and limited partnerships • Operating agreements, shareholder agreements, and governance documents • Commercial contract drafting, review, and negotiation • Vendor, distribution, manufacturing, SaaS, and licensing agreements • Employment, consulting, confidentiality, and equity compensation agreements • Outside general counsel support for growing companies Securities & Private Capital • Private offerings under Regulation D and Regulation S • Private placement memoranda, subscription agreements, and investor documents • SAFE, convertible note, and priced equity financings • Venture capital and private fund formation matters • Fund governing documents and offering document packages • Securities law analysis for private capital raising transactions Mergers & Acquisitions • Letters of intent and term sheets • Stock purchase, asset purchase, and merger agreements • Due diligence coordination and transaction support • Disclosure schedules, closing documents, and post-closing matters • Earnouts, rollover equity, indemnity structures, and related deal terms • HSR, CFIUS, and related regulatory issue spotting for qualifying transactions Digital Assets & Emerging Technologies • Federal-law digital asset and token securities analysis • Entity structuring for blockchain and Web3 ventures • Digital asset fund and operating structures • AML/KYC documentation support and regulatory issue spotting Franchising • Franchise Disclosure Documents (FDDs) • Franchise agreements • Master franchise and area development agreements • Franchise structuring and registration coordination Real Estate Transactions • Commercial real estate acquisitions and dispositions • Real estate joint ventures and syndications • Commercial lease drafting and negotiation • Real estate investment structures and related offering documents Cross-Border & International • U.S. market entry and entity structuring for international clients • Delaware and multi-entity holding structures • Cross-border transaction planning and documentation • Coordination with foreign counsel and tax advisors on cross-border matters Why Clients Hire Me: • Big-law-level drafting with boutique responsiveness • Practical, business-focused advice grounded in execution reality • Clear scoping and transparent fee arrangements • Experience across financings, acquisitions, fund formations, and cross-border transactions Typical Projects: • Contract drafting and negotiation • Entity formation and governance packages • Private offering document suites • Venture financing documentation • M&A transactions from LOI through closing • Fractional or outside general counsel support Industries Technology | SaaS | FinTech | Digital Assets | E-commerce | Healthcare | Real Estate | Food & Beverage | Professional Services
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My name is Elexius. I’ve been practicing since 2016. I began my career doing defense work for insurance companies. I handled worker’s compensation cases, insurance subrogation claims and a number of related employment issues including wage and hour disputes, resignation, termination and release of claims. I also handled employee contract matters and revised contracts as needed for my clients. In my current role I draft contracts and related agreements, including cease and desist, letters of understanding, and various notices. I also handle contractual interference issues.
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