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Value Added Reseller Agreement Template for Indonesia

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Key Requirements PROMPT example:

Value Added Reseller Agreement

I need a Value Added Reseller Agreement for a company that will distribute our software products in Indonesia, with terms that include a minimum sales target, exclusive rights in specific regions, and a clause for quarterly performance reviews. The agreement should also outline support and training provisions, and include a termination clause with a 30-day notice period.

What is a Value Added Reseller Agreement?

A Value Added Reseller Agreement lets companies legally resell products after adding their own improvements or services. For example, a tech company in Jakarta might buy software, customize it for local businesses, then resell it at a higher price. Under Indonesian commercial law, this agreement protects both the original manufacturer and the reseller.

These agreements are especially important in Indonesia's growing tech and retail sectors, where they must comply with the Trade Law No. 7/2014. They spell out key details like territory rights, pricing limits, warranty responsibilities, and how the reseller can promote and modify the original product. The agreement also ensures proper licensing and intellectual property protection for both parties.

When should you use a Value Added Reseller Agreement?

Use a Value Added Reseller Agreement when you plan to enhance and resell someone else's products in Indonesia. This is essential for businesses that add features, customize solutions, or bundle products with services—like software companies that localize international applications for the Indonesian market, or hardware distributors that pre-install custom configurations.

The agreement becomes crucial before starting any value-added distribution activities, particularly under Indonesia's Trade Law and e-commerce regulations. It helps prevent legal disputes by clearly defining your rights to modify and resell products, setting price margins, and establishing territory limitations. Many Indonesian tech companies need this agreement when partnering with global manufacturers or expanding their distribution networks.

What are the different types of Value Added Reseller Agreement?

  • Basic Distribution Agreement: The standard form focused on reselling products with minimal modifications, common in retail and consumer goods sectors.
  • Full-Service VAR Agreement: Comprehensive version for complex technical modifications and service additions, typically used in software and IT industries.
  • Territory-Specific Agreement: Tailored for specific Indonesian regions or markets, including local language requirements and regional trade regulations.
  • Industry-Specialized Agreement: Customized for specific sectors like healthcare or finance, incorporating relevant regulatory compliance and industry standards.
  • Limited-Scope Agreement: Focused on single-product or time-limited resale arrangements, often used for market testing or special projects.

Who should typically use a Value Added Reseller Agreement?

  • Original Manufacturers: Companies that create products and want to expand their reach in Indonesia through value-added distribution channels
  • Value-Added Resellers: Businesses that enhance or customize products before reselling them to end users, particularly in tech and software sectors
  • Corporate Legal Teams: In-house counsel who draft and review these agreements to ensure compliance with Indonesian trade laws
  • Business Development Managers: Professionals who negotiate terms and manage reseller relationships
  • Compliance Officers: Staff who monitor adherence to agreement terms and maintain required licenses under Indonesian regulations

How do you write a Value Added Reseller Agreement?

  • Product Details: List all products, modifications, and value-added services you'll provide, including technical specifications and customization scope
  • Business Terms: Gather pricing structures, profit margins, sales territories, and minimum purchase requirements
  • Legal Requirements: Check Indonesian trade licenses, import permits, and distribution regulations that apply to your specific industry
  • IP Rights: Document ownership rights, permitted modifications, and usage limitations for trademarks and patents
  • Support Structure: Define warranty terms, technical support responsibilities, and after-sales service obligations
  • Quality Standards: Outline quality control measures, testing requirements, and performance benchmarks

What should be included in a Value Added Reseller Agreement?

  • Party Information: Complete legal names, business registration numbers, and authorized representatives of both manufacturer and reseller
  • Product Scope: Detailed description of products, permitted modifications, and value-added services allowed
  • Territory Rights: Clear definition of authorized sales regions within Indonesia's jurisdiction
  • Commercial Terms: Pricing structures, payment terms, and minimum purchase requirements in Indonesian Rupiah
  • IP Protection: Trademark usage rights, modification limits, and confidentiality obligations
  • Compliance Clauses: References to Trade Law No. 7/2014 and relevant Indonesian distribution regulations
  • Dispute Resolution: Choice of Indonesian law and local arbitration procedures

What's the difference between a Value Added Reseller Agreement and an Agency Agreement?

A Value Added Reseller Agreement differs significantly from an Agency Agreement in several key ways, though both involve selling products in Indonesia. Let's explore the main differences:

  • Ownership and Risk: VARs purchase products outright and take ownership, while agents never own the products they sell, acting only as representatives
  • Modification Rights: VARs can modify, enhance, or bundle products before resale; agents must sell products as-is
  • Pricing Control: VARs set their own prices and margins, while agents typically follow the principal's pricing structure
  • Legal Liability: VARs assume full responsibility for product modifications and customer relations; agents act on behalf of the principal
  • Revenue Model: VARs earn through markup on sales, while agents typically earn commissions on transactions
  • Regulatory Framework: Under Indonesian law, VARs require specific trade licenses for product modification, while agents operate under simpler agency regulations

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