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Understanding a Reseller Agreement
Very often, when you start a business, you plan to build the company to reach every corner of your target location. Still, many companies reach a stage where they need to expand but do not have the infrastructure or financial capacity. In such a situation, business owners like you start considering one of the following methodologies - leverage financing to expand current infrastructure or taking on resellers or distributors to cover different markets that you can reach currently. The financing option only makes sense if you have relative certainty of your ability to manage the expansion in fluctuating market conditions. Not all businesses can afford this or carry the financial burden of expensive financing.
Expanding your business using a reseller network allows you to grow your market reach without developing your infrastructure or increasing current operational costs excessively. Using reseller agreement templates gives your business the following potential benefits:
Grow your market penetration and brand recognition.
Expansion into previously untapped markets or regions.
Vastly increased sales with little operational expense.
Although great for business, these benefits don’t just happen without proper documentation and certain vital aspects that must be addressed before your reseller network can start making your profits. You need to set up your reseller network properly with the right legal and operational guidelines so that you will not have an exponential increase in administration and management.
This can only be attained if you have adequately drafted reseller agreements legally binding and clearly define the relationship between yourself and the resellers.
Business-in-a-Box provides the market with the most up to date collection of business templates and documentation that has been created by the best industry and business experts and are all current with the most recent legislation. These templates provide your business with the resources you need to make the most of your market conditions and economic environment. In this collection, you will find comprehensive and customizablereseller agreement templatesthat will guide you through the tricky legalities and administration issues that go along with a reseller network.
These templates will not only help you set up your reseller network but will also introduce you to the more than 2,000 other business templates that could benefit your business in countless ways.
What To Expect When Using Reseller Agreement Templates
To gain the most out of our reseller agreement templates, you must first understand what a reseller is and how it differs from distributors or sales agents. Sales agents bring your business new sales and distributors and can expand your sales reach. However, both these options require you to manage and sell your product or services to your clientele. Resellers bring an already established market or region to your business, and they also offer your company increased sales volume without the administration headache.
With a properly designed reseller agreement template that you can edit to suit your specific business and use as much as you need. Our reseller agreement templates here in Business-in-a-Box are in MS WORD format so that you can use it on any system or computer. The following key point is available to you in reseller agreement templates:
Main Party Details- With any agreement, you must include the registered name and physical addresses of both parties to make the agreement legally binding. These details will serve as the legal addresses for correspondence and regular communication.
Appointment- The appointment section deals with your company appointing a reseller in a specific region or locale. This gives your reseller the right to sell, promote, and distribute your products or services in a particular area.
Products Covered- As a reseller might host products from various companies, you need to specify the product ranges or types that they are authorized to sell according to the agreement. You can use this section to appoint focused resellers for product ranges so that you can maximize the profitability of each relationship. You can also specify that the product range can be extended in the future or reduced if you so require.
Territory and Boundaries- Setting clear boundaries for your reseller network will benefit your business by reducing the conflict and administration resulting from reseller encroaching on each other’s territory. By appointing resellers to specific areas, you will also gauge what products are preferred by specific areas or target markets. This will help in the long run when you consider product developments or upgrades. There should be specified penalties levied if your resellers trade outside of their defined territory without prior approval so that you prevent inconsistencies in your strategy.
Obligations of Reseller- It is vital that you clearly define your reseller’s responsibilities and how they fit into the larger picture that is your business. You need to set the terms of how you and your resellers will work together because, after all, both parties want to profit from the relationship. This is one of the most critical clauses in the agreement, and you must give it the proper attention it needs to gain the maximum benefit from it.
Marketing & Advertising- Understanding that you have spent a significant amount of money creating your brand, you would like your resellers to continue along the same lines. By detailing how, where, and when your resellers can advertise your products and how they would roll out marketing initiatives, you can ensure that the appointment of resellers will not damage your market reputation and brand recognition. You may also stipulate an approval process for any advertising or marketing material they might want to publish. If you do this, you will have the control you need about how your products are marketed and maintain the integrity of your business and marketing policies.
Sales Support- For the reseller relationship to be effective, you must provide certain sales support functions to the reseller network. This support will most likely be similar to your regular sales support utilized by your sales department but also might include additional procedures like sales training or product training. Through this, you will be able to keep your sales initiative at the desired standard across your reseller network. This is one area where you might have to expand your current infrastructure to facilitate the required support functions.
Company Policies- Although your resellers will operate as independent entities that will have to comply with certain parts of your company policies so that they become an extension of your business model. This may require some training and provision of your company policy documentation. If so required, you should consider adding a specificnon-disclosure agreement templateto this reseller agreement to prevent your intellectual property loss.
Minimum Orders- You need resellers that are committed to your product as they are to their business. One way of doing this is to set minimum order thresholds so that you can manage the effectiveness of your reseller network using their stock ordering habits. If your reseller cannot maintain the minimum ordering standards, you might want to consider removing them from your network.
Warehousing and Security- Depending on your products’ bulk, you would need to ensure that your resellers have sufficient warehousing and security to safeguard your products and their financial commitment.
Exclusivity- In any reseller relationship, you need to award a certain amount of exclusivity to effectively manage the resellers, sales territory, and product reputation in the market.
Obligations of Company- Just like you specify certain duties and responsibilities for the resellers, you must also stipulate what your company responsibilities are according to the reseller agreement. You might want to focus on manufacturing or product development, while your reseller network will focus on the sales and marketing of your products.
Purchasing- You must commit to installing the systems needed to allow your resellers the ability to purchase your products without unnecessary delays or paperwork. In most cases, newly established reseller networks utilize a simple purchase ordering process to provide the paper trail for the administration department.
Ordering Systems (Media)- If your company uses an ordering system, you will need to train the reseller representative on the system’s use. You should also allow for back-office connectivity for your reseller network that would streamline the ordering process.
Ordering Process- As a standard function of this agreement, your resellers will commit to placing orders according to your current internal systems,. You will commit to fulfilling these orders in a timely fashion. You may also set further ordering limitations and requirements by simply adding the terms in this section.
Products- Product substitutions and product upgrades are a business norm. This section highlights these aspects of your business to the resellers and formulizes them by adding them to the assigned agreement.
Shipping- your current shipping methods must be able to deal with the influx of new orders from your reseller network. You should document how your products will be shipped to your resellers mainly if they are spread across the country or even internationally.
Prices and Payments
Reseller Pricing- The Reseller Agreement must have specific pricing structures for your reseller network. You might even have a tiered pricing structure to motivate your resellers to achieve better pricing through higher sales numbers.
Price changes- You must document the lead-time to give your reseller network on any pricing changes. This will also help when there are raw material changes in your production process.
Administration- Proper administration is a vital part of any business. How you administer the paperwork between you and your reseller network will help you maintain proper corporate control of your entire business model.
Returns Policy- A clearly defined returns policy must be included in the Resellers Agreement.
Trademark and Trade Names- Any Trademark and Trade Name policies must be transferred to the reseller via the agreement.
Software Products- If you develop software products or your products have software as part of the inventory, you need to specify the distribution rights and regulations within this reseller agreement.
Agreement Term- You should consider setting a limited term on your reseller agreement so that you have the option to update your network by adding or reducing your reseller network.
Termination and Confidentiality of Agreement- The template will guide you with termination and confidentiality clauses that will protect your company and your network from market conditions.
Liability and Indemnity- Clearly defined liability and indemnity must be specified for both parties so that you each understand where your responsibilities lay according to the agreement.
Warranties and Representations- Your products have certain warranty information that must be detailed in the agreement; you should also outline how your network must proceed to validate any warranty claims.
General Terms and Conditions- The Reseller Agreement template has a standard set of terms and conditions that you may edit and customize to suit your company and your product profile.
When considering expanding your business with a reseller network, there are two things you need to remember. The first is that you can get any business document templates at Business-in-a-Box to facilitate your network’s proper management. You can get access to this collection of business templates by simplysigning up here.The second aspect is that with our reseller agreement templates, you can build your business reseller network effectively and increase your profits and market reach legally and with style.
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