Jump to Section
Need help with a legal contract?
What is a Software Reseller Agreement?
A software reseller agreement is a legal agreement that outlines the rights and responsibilities between an owner of the software, publisher, person, or business or a reseller that wants the rights to sell or license the software to a third party.
Often referred to as a software distributor agreement or software distribution agreement, this common software agreement is created for one purpose: to make sure both parties are keeping up their end of the bargain.
The entire concept of third-party reselling is not new or without its faults. Missed communication, poorly defined requirements, or loopholes could threaten even the best business deals. This is why a licensed attorney should review any software agreement that involves reselling.
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.
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:
- Information security
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.
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.
Post a project in ContractsCounsel’s marketplace to receive flat fee bids from lawyers for your project. All lawyers have been vetted by our team and peer-reviewed by our customers for you to explore before hiring.
Meet some of our Software Reseller Agreement Lawyers
January 20, 2022
Dual Qualified New York Attorney & Enrolled NZ Barrister & Solicitor
November 8, 2021
Ms. Penovich partners with clients to overcome complex challenges and find innovative solutions. Ms. Penovich has served as General Counsel at J.W. Cole and an Adjunct Professor of Estate Planning at the MUMA College of Business at the University of South Florida. She is a member of the Florida Bar, and has over 15 years of progressive financial services experience developed at top-tier financial firms including Transamerica, Raymond James, and Citi.
November 9, 2021
Attorney licensed to practice in both California and New York, Josiah is focused on helping people understand what's in their contracts, and do business with confidence.
November 12, 2021
I am an experienced in house counsel and have worked in the pharmaceutical, consumer goods and restaurant industry. I have experience with a variety of agreements, below is a non-exhaustive list of types of agreements I can help with: Supply Agreements Distribution Agreements Manufacture Agreements Service Agreements Employment Agreements Consulting Agreements Commercial and residential lease agreements Non-compete Agreements Confidentiality and Non-Disclosure Agreements Demand Letters Termination notice Notice of breach of contract My experience as in house counsel has exposed me to a wide variety of commercial matters for which I can provide consulting and assistance on. I have advised US, Canadian and International entities on cross-functional matters and have guided them when they are in different countries and jurisdictions as their counterparties. I can provide assistance early on in a business discussion to help guide you and make sure you ask the right questions even before the commercial agreement needs to be negotiated, but if you are ready to put a contract in place I can most definitely help with that too.
November 16, 2021
Jeff Colerick has been practicing law for over 30 years and has devoted his professional career to providing clients with intelligent representation and personal care. His experience as a lawyer involving complex matters has resulted in a long history of success. Jeff has built a practice based on a deep understanding of real estate assets and corporate activities. He combines his industry knowledge with a practical and collaborative approach to problem solving. Jeff’s client relationships are strong because they are built on mutual respect. Jeff talks the language of real estate and understands that it is a vehicle to deliver your business strategy. Jeff provides practical, responsive, and strategic advice related to real estate acquisition, construction, leasing, and sale of a wide range of real property types, including office, retail, medical, industrial, industrial flex-space, mixed-use condominium, multifamily and hospitality. As leader of the Goodspeed Merrill real estate practice group, Jeff represents clients with commercial and residential transactions, purchases and sales, land acquisition and development, real estate investment and financing, financing liens and security interests, and commercial leasing and lease maintenance, including lease enforcement support and advice. The firm represents clients in matters concerning construction, lending, developers, contractors and subcontractors, cell site leasing, property and boundary disputes, common interest community law, and residential condominiums and planned communities.
November 16, 2021
Attorney Yu represents clients in business and real estate transactions and has successfully handled more than 200 cases. She has experience in corporate law, including forming legal entities, employment law and workers’ compensation law matters pertaining to wage and hour violations, industrial injuries, misclassifications, and other employment-related torts and contracts. Attorney Yu works with employers to address employee relationship issues, develop effective policies and craft employment agreements. Attorney Yu regularly advises clients on the legal and business aspects of potential investments, ongoing business operations, debt collections, shareholders and partners disputes, business purchase agreements, risk assessment, intellectual property disputes, and potential contract disputes. She regularly handles real estate law matters such as landlord-tenant disputes, lease agreements, buy-sell disputes, title disputes, and construction disputes. She also has substantial experience settling debts, and she drafts, reviews and negotiates settlement agreements. Attorney Yu conducts extensive legal research and provides on-point legal advice to both corporate and individual clients.
November 16, 2021
Harrison Kordestani is an executive with over twenty-five years experience in entertainment and media, energy, technologies, and start-ups. Mr. Kordestani has also developed a specialized legal and strategic consulting practice representing select entertainment, oil and gas, mortgage lending, and technology start-up clientele. He is also deeply passionate about new technologies and has also actively worked in building companies in the video-on-demand, wearable tech, information of things, demand prediction and app-marketing spaces. As an attorney, Mr. Kordestani's focus has been on transactional drafting and negotiation and providing ongoing legal counsel, corporate compliance, and contract interpretation to numerous private individuals as well as companies in varied fields.