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.
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.
(c) Progressive Legal Pty Ltd – All legal rights reserved (2020)
“I highly recommend Progressive Legal to anyone who wants a solid foundation for business success.”
Josie Ison, Founder at Event Entertainers
Law delivered differently,
more resolution, less confusion