1. Get your lawyer to write/review the software license

Always get a lawyer to draft your software license agreements based on your instructions on how you wish to commercialize your software. Sometimes you will have to sign the reseller’s contract because of their bargaining power. Never sign the reseller’s standard contract without having it reviewed and amended by your lawyer. The reseller’s standard contract has been written to protect their interests and not yours.

2. Make sure you give the Reseller the rights needed to resell

A resale license permits your reseller to sell the software to other customers but not normally to use it themselves. In order to sell the software, the reseller will need to be able to advertise and promote it, and to demonstrate it to customers. Your software license should permit these activities. The ultimate end customer that the reseller sells the software to should just be granted a right to use the software for its normal purpose (and not to resell).

3. Define an appropriate Territory

Your license should specify the geographical area in which the reseller may resell the software. The reseller may have a strong sales network in a particular country or region and in such a case you may wish to grant the right to resell in this particular area. To maximize your sales, you may wish to appoint other resellers to sell your software in other territories and in doing so give them some form of exclusivity (as discussed below).

4. Be careful with Exclusivity

Some resellers may request to have exclusivity in their area. This typically means that no other resellers are granted the right to resell the software in the territory. You should only grant such exclusivity if you think the reseller will make enough sales to justify it. In the EU under competition law exclusivity generally can be only be granted to stop active sales in a territory from another reseller. If you decide to grant exclusivity it should be limited to a specific time period and it should only be extended if the reseller hits a specified sales target.

5. Watch out for Relabelling or Redevelopment

Relabelling means the reseller can label or brand the software under their own name and branding. This may make sense when the reseller has a powerful brand and you can benefit from higher sales by selling under this brand. If you decide to permit this you should specify carefully the circ*mstances in which it is permitted.

Redevelopment means you permit the reseller to change or further develop your software. This requires you to provide the source code to the reseller. This is unusual as normally in a software license you only license the object code. However, if there is an important commercial reason for doing this you should make sure that you own any redeveloped software and that you can license it to your other customers. The reseller should just be permitted to resell the redeveloped software to its customers in return for paying you a royalty.

Bernie Amarillo, Swiss entrepreneur, learned about the the do’s and don’ts of software resale licensing the hard way. See the video.




The agreement specifies the rights and responsibilities of each party involved in reselling the software to third parties. Sometimes referred to as a software distribution agreement, this type of licensing agreement is created set clear legal and business terms on the obligations of both parties.

What are the four types of software licenses list them? ›

The five categories of software licensing are:
  • Public domain license. A public domain license is the most open form of license software may have. ...
  • GNU Lesser General Public License (LPGL) ...
  • Permissive license. ...
  • Copyleft license. ...
  • Proprietary license.
Jan 26, 2023

How to create a reseller agreement? ›

  1. Defining the scope of the reseller agreement.
  2. Outlining the duration of the agreement.
  3. Outlining the rights and obligations of the reseller and the customer.
  4. Outlining the scope of the reseller's services.
  5. Outlining any exclusions.
  6. Setting out payment terms.
  7. Stating the payment terms.

What is a software reseller agreement? ›

The agreement specifies the rights and responsibilities of each party involved in reselling the software to third parties. Sometimes referred to as a software distribution agreement, this type of licensing agreement is created set clear legal and business terms on the obligations of both parties.

What is included in a software licensing agreement? ›

Within the software license agreement, it will detail where customers can install it as well as how and how often it can be installed. Additionally, it should answer questions your customers may have about their ability to copy it, modify it, or redistribute it.

What is the difference between licensing and selling software? ›

Selling software implies transferring the ownership of the software to the buyer. The buyer gets full rights to the software, including the right to modify, distribute, and resell it. On the other hand, licensing software means granting permission to the licensee to use the software under certain conditions.

Which type of software license is the most restrictive? ›

Commercial or proprietary.

Of all types of software licenses, these tend to be the most restrictive.

What is the difference between licensing agreement and reseller agreement? ›

One of the primary differences between licensing and reseller agreements is the type of rights that are granted. A licensing agreement grants the licensee the right to use a certain set of intellectual property. A reseller agreement grants the reseller the right to sell the vendor's goods or services.

How do I set up a reseller program? ›

Starting a reseller program requires a few specific steps in order to set yourself up for long-term success.
  1. Research if there's a market for your business. ...
  2. Determine your target audience. ...
  3. Create a clear value proposition. ...
  4. Create a sales strategy. ...
  5. Create an internal sales process. ...
  6. Create partner support resources.

What is the difference between distribution and resale? ›

Unlike distributors, resellers don't purchase and store your product, ready to sell. Instead, they act as a middleman, taking a commission when they sell your product to a customer.

What is a software reseller called? ›

These companies can also be referred to as “value-added resellers” (VARs) as they provide additional value to the software by offering services such as technical support, installation, and setup. One common practice of software resellers is to offer “white label” Software as a Service (SaaS).

How to structure a SaaS reseller agreement? ›

SaaS Sales Agreement between COMPANY and RESELLER
  1. Parties. Name. COMPANY (“COMPANY”) Address. Name. RESELLER. ...
  2. Term. XXX.
  3. Services. The Services to be provided by Reseller under this Agreement are outlined in Schedule 1.
  4. Fees. COMPANY will pay Reseller the Fees as calculated in accordance with Schedule 2.
  5. Commencement Date.

What is the difference between a software license and agreement? ›

Often the license is in the middle of the chain of users. A software company wants to keep ownership of its code and programs, but still sell the use of the software to others. A license agreement does just that. It divides ownership and use rights between you and the software company.

What are three 3 things which a licensing agreement allows? ›

A licensing agreement is a contract between two parties (the licensor and licensee) in which the licensor grants the licensee the right to use the brand name, trademark, patented technology, or ability to produce and sell goods owned by the licensor.

What are the problems with licensing agreements? ›

Licensing agreements allow parties to control property and enter new markets without having to spend the money to do so. Drawbacks of these deals include establishing a relationship with the wrong company and the possibility of losing a company's reputation.

What are four of the major types of open source licenses? ›

There are four main types of licenses for open source software:
  • Permissive.
  • Copyleft.
  • Weak copyleft.
  • Public domain.
Jan 4, 2023

What are the three most used categories of application software 4 list? ›

Some of the commonly used application software include:
  • Word Processing Software.
  • Graphics Software.
  • Spreadsheet Software.
  • Presentation Software.
  • Web Browsers.

What is the best software license? ›

Top 20 Open Source Licenses 2022-23
1MIT LicenseYes
2Apache License 2.0Yes
3BSD 3-Clause "New" or "Revised" LicenseYes
4BSD 2-Clause "Simplified" LicenseYes
16 more rows
Apr 1, 2024

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