A value-added reseller contract (VAR) is an agreement between a manufacturer and an individual or company who purchases products from the manufacturer to resell them to end-users. The VAR adds value to the product by providing additional services, such as customization, installation, and support. In this article, we will delve into the benefits of a VAR contract and the key clauses that should be included in the agreement.
Benefits of a VAR Contract
A VAR contract benefits all parties involved. The manufacturer benefits by expanding its reach to customers who would not have otherwise bought their products. The VAR benefits by having access to high-quality products that they can resell with added value. The end-user benefits by having a one-stop-shop for product acquisition, customization, and support. Some of the specific benefits of a VAR contract include:
1. Increased Sales: A VAR contract can help a manufacturer expand its sales reach by providing access to new markets or customers who may not have been reached through traditional channels.
2. Increased Profitability: By adding value to the product, a VAR can charge a higher price than the manufacturer would have for the same product. This adds to their profitability as well as the manufacturer`s.
3. Customer Loyalty: VARs often have a closer relationship with their customers than manufacturers do. This can lead to long-term customer loyalty and an increased likelihood of repeat business.
Key Clauses in a VAR Contract
A VAR contract should be carefully drafted with the help of a lawyer. Some of the key clauses that should be included in the agreement include:
1. Product Pricing: This clause should address the pricing of the products that the VAR will be reselling. It should specify the manufacturer`s suggested retail price and the minimum resale price that the VAR can charge.
2. Territory: This clause should specify the geographic area where the VAR is authorized to sell the products. It should also specify any restrictions on sales to customers outside of that area.
3. Exclusive Rights: This clause should specify whether the VAR has exclusive rights to sell the products in the defined territory or whether the manufacturer can sell the products through other channels.
4. Marketing and Promotion: This clause should specify the marketing and promotion responsibilities of both the manufacturer and the VAR. It should also address any co-marketing or co-branding initiatives.
5. Intellectual Property: This clause should address the ownership of any intellectual property related to the products, including trademarks and patents.
A value-added reseller contract can be a win-win for both manufacturers and VARs. The manufacturer benefits from increased sales and access to new markets, while the VAR benefits from higher profitability and closer relationships with customers. However, it`s important to ensure that the VAR contract is carefully drafted with the help of a lawyer to ensure that the interests of all parties are protected.