When it comes to running your successful business, branding is a crucial element. Many businesses have taken the path of developing their brand by manufacturing their own products. However, the road to manufacturing a product is complex and if the appropriate due diligence isn’t conducted concerning the manufacturer, it can sometimes result in poor quality products or even faulty ones.
An alternative you could consider is selling products already manufactured by another party and entering a white label agreement to sell those products under your brand.
What is a White Label Agreement?
The white label agreement is used for an arrangement where one party provides goods or services and the other party uses these goods or services under its own brand.
This is ordinarilyused where one party manufactures a generic product and supplies it to another party that brands it and sells it directly to customers. White label agreements are commonly used for the production of electronics, software and food.
Things you may include in a White Label Agreement
1. Product warranties
Some warranties that may be included are:
It should be made clear in the agreement that the party supplying the goods must provide goods of acceptable quality and free of defects;
The goods are fit for purpose;
The goods are safe and are in no way hazardous;
The party supplying the goods should warrant that the goods don’t breach any rights, including intellectual property rights, of third parties.
2. No partnerships
The agreement should state that the parties are in no way partners or joint venturers, but are classed as contractor and principal.
Will the supplier be providing the goods on an exclusive basis or are they free to supply to other parties?
4. Intellectual property rights
Will the supplier provide the reseller a licence to sell the products or will the reseller buy the products outright?
It should be noted that the reseller’s branding, copyright and any trade marks are their intellectual property and that nothing in the agreement confers any of their intellectual property rights to the manufacturer.
There should be listed certain circumstances in which the supplier will repair or replace defective goods.
6. General terms
For example: limitation of liability of the parties, confidentiality, termination and dispute resolution.
Advantages of using a White Label Agreement
A White Label Agreement allows resellers to quickly establish themselves in any market. The reseller isn’t burdened with the costs of developing and manufacturing a product, which can also be a time consumingendeavour. The supplier is able to sell its products to the reseller and not have to concern itself with the costs associated with marketing it.
What are the different types of White Label Agreements?
White Label Software Agreement
A white label software agreement sets out the terms and conditions on which the supplier provides the Software as a Service (SaaS) solution to the customer. It should include the supplier’s disclaimers and limits on the supplier’s liabilities in providing the SaaS solution. It also sets out the service level agreement committed to by the supplier.
White Label License Agreement
This agreement defines the terms between a white label platform service produced by one company (the supplier) that other companies (the customers) rebrand to make it appear as if they had made it. For example, a booking platform for hair salons that hair salon owners can rebrand with their own logo, colour scheme and style.
White Label Partnership Agreement
In the provision of services, a white label partnership agreement can be set up, for example, between an individual and a company, when the individual provides goods or services to the company on a project basis, without being part of the company’s core team.
White Label Agreement for Products
This White Label Agreement sets out particular products a supplier agrees to provide to a customer. The customer’s branding and trade marks are applied to the product, for the customer to sell directly to consumers as its own product.
White label agreements open up new possibilities for your business. If you’re looking to reduce the costs associated with developing and manufacturing a product, then entering into a white label agreement might be for you.
Consider the points discussed in this article when entering into a white label agreement. It’s important that the agreement makes the rights and obligations of each party clear, to limit legal risk and to avoid issues down the track.
We can draft a tailored white label agreement to protect your business for $1,300 + GST.
Contact us today if you require any assistance with White Label Agreement.
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