5 Things Your Channel Partner Agreement Should Have

Before going into a business partnership, it’s advisable to understand how such a partnership can promote your products/services. And to ensure that the partnership works without problems, you have to create a channel partner agreement.

A Channel Partner Agreement provides parties involved in a partnership with an enforceable and binding agreement that outlines the rights and obligations of each party. Furthermore, it serves as protection to the involved parties if a breach or non-compliance occurs.

This article will show you five things that you should include in your channel partner agreement.

Definitions

There are sections of a channel partner agreement that can be a little complicated and confusing. This type of agreement usually contains legal language and all sorts of marketing jargon that some partners might not be conversant with.

The good thing is, this problem can be solved by including a glossary containing all the unfamiliar terms. This way partners won’t have to worry about not knowing the meaning of any marketing or legal term contained in the channel partner agreement.

It is common to see several “end-user” terms in the glossary if your company is a service provider. In this case, the end-user you would address in your channel partner agreement would be an individual subscribing to whatever services your company provides.

Another term that many channel partner agreements have is “hereunder.” Typically used in legal documents, hereunder means something that occurs further in the document.

Confidentiality Obligations

Successful partnerships usually require a strong degree of collaboration. When this type of relationship is formed, it is common for some type of confidential information to get exchanged. To ensure that your brand’s secrets are protected, your channel partner agreement needs to include confidentiality obligations.

Including a confidentiality obligation section is a way to protect information such as your company’s trade names, trade secrets, and other types of treasured intellectual property. It also protects your brand in a situation where a partner tries to reverse engineer your company’s processes.

Terms of Marketing

Hopefully, your channel partners are passionate about promoting your products/services. Even so, it’s important to keep in mind that most industries have firm advertising rules and regulations to protect consumers. If such laws aren’t followed, it can have undesirable consequences for both you and your channel partners. You don’t want a channel partner making third-party claims that can’t be verified by your company.

To avoid these sorts of problematic situations and the likelihood of disobeying applicable laws, your channel partner agreement needs to have a section dedicated to terms of marketing. This section should comprehensively outline how partners can and can’t promote your products/services.

You can ask the partner to get prior written consent before making any kind of adjustments to the original marketing message. It’s also a smart idea to outline every detail, from product claim guidelines to your channel partner’s use of your company identity, in this section.

Payment Terms

If you are looking to motivate channel partners to promote your brand, offering some sort of incentive is one sure way to get started. There are several ways for a company to incentivize potential channel partners. That being said, marketing incentives typically come in the form of compensation. This section of your channel partner agreement covers payment terms, including how much you will pay your partner for achieving specific results.

Termination Terms

Sadly, there are no assurances that a partnership will progress smoothly for every party involved. Such is the nature of the business world. For instance, a partner could overstep their bounds by infringing on your company’s rights.

Taking such situations into consideration, it’s advisable to include a termination section in your channel partner agreement to cover the consequential events that will follow after a breach of terms.

Let’s say you enter a 2-year long agreement with a channel partner. After six months, the partner decides they can no longer hold up their end of the deal. Without a termination clause, you’ll most likely be at a loss while the partner walks free.

Conclusion

As a business owner, it is your responsibility to do whatever ethical thing you can to protect your business.

Before you enter into your next partnership with a retailer, wholesaler, distributor, or something similar, be sure to have a channel partner agreement in place. This is the best way to secure your business.

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