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What is a VAR Reseller Agreement?

A VAR (Value-Added Reseller) Reseller Agreement is a binding legal contract between a product’s manufacturer or developer and a VAR. This agreement outlines both parties’ rights, responsibilities, and obligations. 

What is a VAR?

A VAR, or Value-Added Reseller, is a company that adds features or services to an existing product and then resells it (usually to end-users) as an enhanced or complete solution.

This process typically involves taking a core product, such as software or hardware, and integrating additional features or services to create a new, more comprehensive package.

VARs operate in various industries but are most common in the technology and IT sectors. The value they add can take many forms, including, but not limited to:

  • Software Customisation: Tailoring software to meet specific customer requirements.
  • System Integration: Combining various IT systems and applications into a seamless, cohesive system.
  • Custom Hardware Configuration: Assembling and configuring hardware to meet unique customer needs.
  • Consulting Services: Providing expert advice and support to optimise product use.
  • Training and Support: Offering training and ongoing support to ensure customers can effectively use the product.

The role of a Value-Added Reseller (VAR)

A VAR is a company or business specialising in buying products or services, often in the IT and technology sectors, to add value before reselling them as a comprehensive package.

This added value may come from integrating various products from different suppliers or incorporating additional services like consulting, customisation, support, or training.

What is a Value-Added Product?

The heart of the VAR agreement lies in the value-added product, which is essentially any product or service enhanced by the VAR. These enhancements enable the VAR to sell the product at a higher profit margin. The agreement addresses critical elements like copyrights and licensing related to these products.

Key components of a VAR Reseller Agreement

  1. Product or Service Description: It’s crucial to outline a detailed description of the products or services the VAR intends to enhance. This can include a summary within the agreement or an attached detailed product description.
  2. Exclusivity or Non-Exclusivity: This clause determines whether the VAR has exclusive rights to work on and resell the product in a particular market or region. While most non-exclusive agreements may grant exclusivity in specific industries or fields.
  3. Product Pricing: The agreement should specify the pricing for each product or service that the VAR will purchase. It may also be noted that prices are subject to change, with the necessary notice period for any alterations clearly stated.
  4. Licensing: A Software License Agreement is vital to define the terms of software use and customisation when the VAR adds new features. The manufacturer must grant a license to the VAR for this purpose, including any necessary terms on sub-licensing.
  5. Confidentiality: Provisions regarding handling confidential information about the product are essential. For detailed guidelines on protecting such information, a Non-Disclosure Agreement template can be invaluable.
  6. Term and Termination: The agreement’s duration, its effective date, and conditions under which it may be terminated should be clearly defined.
  7. Governing Law: This clause specifies the legal jurisdiction and laws governing the agreement, providing a framework for resolving disputes.
  8. Marketing Strategies: Both parties should agree on the marketing approach for the enhanced product, including profit sharing, sales organisation, and the involvement of third parties or consultants.

To strengthen the legal foundation of your VAR operations, consider exploring these additional resources:

Zergal VAR agreement template

VAR Reseller Agreements are fundamental in establishing a clear and mutually beneficial relationship between manufacturers or developers and VARs. By detailing the product or service enhancements, marketing strategies, pricing, and legal protections, these agreements lay the groundwork for successful partnerships in the resale market. 

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