SaaS suppliers who decide to use a local partner to resell their SaaS software to customers outside of the countries in which they are based, will need to have a reseller/distributor agreement in place between themselves and each SaaS reseller/distributor.
What is a SaaS Reseller/Distributor?
A SaaS reseller is the same as a SaaS distributor. A reseller/distributor purchases the supplier’s SaaS software and services under the terms of a reseller/distribution agreement. The SaaS reseller/distributor then resells the SaaS software and services to its own local customers in its local territory using its own terms and conditions (and SLA).
The SaaS supplier has no legal relationship with the SaaS reseller/distributor’s customers. Customers enter into a SaaS agreement with the reseller/distributor directly.
Reasons for Using a Reseller/Distributor
SaaS suppliers use resellers to facilitate sales of their SaaS software and services to customers who would not otherwise be able to purchase the SaaS software, due to the Supplier’s:
- lack of physical presence in the customer’s country
- lack of sales channels and contacts in the customer’s country
- inability to speak the local language
- inability to provide customer support in the local language
- inability to provide customer support within the customer’s local business hours
- terms and conditions not being written in the customer’s language, or subject to local laws and regulations
By using a SaaS reseller/distributor the above problems are resolved as the SaaS reseller sells the SaaS software directly to customers, in the local language, pursuant to local law, with local support as if the SaaS software was his own software.
The main advantage of using a SaaS reseller is that the SaaS supplier will have no liability to customers – as there is no contract or legal relationship between the customer and the SaaS supplier. For example, any implementation issues or software errors that the customer encounters when using the SaaS software will be the SaaS reseller’s problem. The distributor will be liable to the customer and will be obliged to resolve such issues directly with the customer.
The main disadvantage of using a SaaS reseller is that the SaaS supplier has no control over the sales process and in particular of the choice of customers. Also, the terms of the reseller agreement itself will be subject to local anti-competitive laws and regulations.
Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:
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