As a wholesaler or manufacturer, you likely need to engage another business to sell your goods.

You may have heard of these arrangements being referred to as a supply or distribution agreement before.

A reseller agreement involves engaging a business to resell your goods to the general public or other third parties. Generally, resellers do not purchase the stock from the wholesaler and will take a percentage from any sales that they make.

The supplier in these agreements needs to ensure that their rights and interests are protected, while the reseller will need to be aware of their obligations and what they are agreeing to when signing the contract. It is also important that you distinguish between an agency agreement and a reseller agreement in the contract.

What to Include in a Reseller Agreement

Below are some common clauses that you should include in your agreement, which should be tailored to your specific goods or services:

• Pricing: You should include the recommended minimum retail price for your goods.
• Term: Specify how long the agreement will last, and whether there will be an option to renew.
• Orders: Clarify whether the reseller needs to place an order with you or if it will be a periodic delivery.
• Delivery: Detail how and in what increments the goods will be delivered to the reseller, and who will bear the risk.
• Marketing: State whether you require the reseller to market and advertise your goods.
• Intellectual Property: Specify whether the reseller is permitted to use your intellectual property, such as trademarks, advertising, and marketing materials. You will likely want to grant the reseller a licence to use trademarks and other materials to promote your brand. It is essential that you do not assign intellectual property rights to the other party. Also, clarify how the reseller can use your intellectual property. We recommend obtaining legal advice on this area of a reseller agreement to protect your business assets.
• Territory: Specify whether there is a particular area in which the reseller is allowed to sell the goods.
• Exclusivity: Clarify whether the agreement is exclusive, or if the supplier is permitted to appoint other resellers within the agreed territory.
• Termination: Outline the circumstances under which the supplier or reseller can terminate the agreement.

There are numerous other clauses that should be included and can be tailored to your business, which a legal professional can assist you with.

What is an Agency Agreement?

An agency arrangement involves an agent and a principal, where the agent (the seller of the goods on your behalf) has the authority to act on behalf of the principal (the owner of the goods). The agent has the ability to enter into contracts on behalf of the principal, and it is usually an exclusive agreement, meaning a principal will only have one agent.

In contrast, a reseller agreement is between you and the reseller only, and you will not usually be bound by the actions of the reseller. There is therefore separation between you and the customer, and suppliers often have multiple resellers. This distinction is why it’s essential to seek legal advice to ensure that the agreement does indeed qualify as a reseller agreement.

Conclusion

Whether you are a wholesaler or a business looking to enter into a reseller agreement, it is important to first obtain legal advice. This will ensure that as a supplier, your rights and interests are protected, and as the reseller, you are aware of all your rights and obligations under the agreement. Obtaining professional advice will also ensure that your agreement is properly structured and accurately reflects a reseller agreement.