A reseller agreement with discounts for sales is a strategic tool to incentivize resellers while maintaining control over pricing, brand integrity, and market reach. Below is a detailed breakdown of how to structure such an agreement, incorporating key elements from the provided search results:
1. Discount Structures
Discounts are a core component of reseller agreements to encourage sales volume and loyalty. Common approaches include:
- Tiered Discounts: Offer escalating discounts based on quarterly or annual purchase volumes. For example:
- Wholesale Tier: 40% off SRP for $5,000–$9,999 in quarterly sales .
- Distributor Tier: 55% off SRP for $25,000+ in quarterly sales .
- Volume-Based Incentives: Additional discounts (e.g., 1% off) for ordering full master cases or bulk shipments .
- Negotiated Rates: Custom discounts for high-volume resellers or strategic partners, reflected in sales orders .
- Promotional Discounts: Temporary discounts for co-op advertising or seasonal campaigns, subject to supplier approval .
2. Payment Terms and Conditions
Clear payment terms ensure financial alignment:
- Net 30 Days: Standard payment terms for approved resellers, with invoices due 30 days from shipment .
- Prepayment Requirements: International resellers may need to pre-pay via wire transfer before shipment .
- Late Fees: Interest charges (e.g., 18% annually) on overdue payments .
- Tax Compliance: Resellers bear responsibility for taxes, duties, and fees in their territory unless exempt .
3. Performance Metrics and Compliance
To maintain accountability and alignment:
- Sales Targets: Define minimum sales thresholds (e.g., quarterly averages) to retain discount tiers .
- MAP Policy Compliance: Resellers must adhere to Minimum Advertised Pricing (MAP) rules to avoid undercutting brand value .
- Audit Rights: Suppliers may audit reseller records to verify compliance with pricing, inventory, and sales practices .
- Termination for Non-Performance: Missed targets or MAP violations can trigger termination or loss of discounts .
4. Exclusivity and Territory Rights
Exclusivity clauses can enhance reseller commitment:
- Exclusive Territories: Grant sole rights to sell in specific regions or industries, often tied to higher discounts .
- Non-Exclusive Agreements: Allow multiple resellers in the same market but with lower incentives .
- Restrictions on Cross-Border Sales: Prohibit resellers from shipping products outside designated territories without approval .
5. Legal and Operational Considerations
- Intellectual Property (IP) Protection: Resellers must use approved branding, trademarks, and marketing materials .
- Confidentiality: Non-disclosure clauses protect trade secrets, pricing strategies, and customer data .
- Governing Law: Specify jurisdiction for dispute resolution (e.g., California for U.S.-based agreements) .
- Export Compliance: Prohibit sales to embargoed regions or sanctioned entities under U.S. or international law .
Example Clause for Discounts
“Reseller shall receive a 45% discount on SRP for quarterly purchases between $10,000–$14,999. Discount tiers are reviewed quarterly and adjusted based on shipped, invoiced, and paid orders. Failure to meet minimum thresholds may result in tier downgrades or termination.” .
Key Takeaways
- Customization: Tailor discount structures to your product type, market, and reseller capabilities .
- Transparency: Clearly define discount eligibility, payment terms, and penalties in writing .
- Legal Review: Engage attorneys to ensure compliance with antitrust, export, and consumer protection laws .
Leave a Reply