The 4 Things to Do Before Signing a White Label Agreement
These are the essential factors that make a successful white label relationship.
Branding your business is essential to increasing your customer base. However, branding is not easy on the wallet. For example, one of the most important parts of branding is your company logo. Unless you are already a graphic designer, that’s usually the first expense you have to budget.
Your brand is built over time. It is your company's reputation, which is the result of hard work. So, with all of that investment of people, time, and money, why have another business show their name and logo?
White labeling has been around as long as business itself. It is a way to license another company's services with your branding. Before you are ready to sign a license agreement, there are four things you need to consider.
1. Find the Right Partner
Probably the most important part of any business relationship is finding the right partner. Partnerships can be very complicated and take time to develop, so it's important to choose the right one. Price, although an important part of all business relationships, should not be the primary factor in determining which company you are going to partner with in a white label licensing agreement.
One of the most important elements in a white label partnership is support. It is essential that your partner be available and ready to help you in resolving problems. Getting the answer “That it will be fixed in the next version” isn’t what you want to hear especially when you find out the next version isn’t being released for another two months.
2. Read the Fine Print
The basis for all white labeling partnerships is the license agreement. The sections that typically appear in any license agreement are “Term & Termination,” “Limitation of Liability,” “Intellectual Property,” and “Jurisdiction” are just a few of the typical sections. Make sure that you can exit the agreement without cause. If you can’t exit the agreement with a 30 day notice you could be stuck for the full term.
Also, make sure you understand the Limitation of Liability section and make sure that the Licensor (White Label Partner) is liable for any security breaches and will defend you in court should it come to that. Clearly, you should have a lawyer review your agreement before you sign.
3. Understand the Fees and Other Costs
In most cases the fee structure for a white labeling is straightforward. You will be charged a one-time setup fee along with a monthly license fee. You should also look for other costs such as support, graphic design, consulting, and special add on services. For example, there may be a fee for an increase in storage, bandwidth, or number of users. You should be aware of any such limitations that could be in your contract. Also, make sure the contract is renewable with the same terms and hopefully the same fees and costs. This is why a lawyer is essential in finding details in the agreement that might not be obvious in an initial reading.
4. Focus on Your Brand
Ultimately, you are looking to grow your business through the new white label partnership. You should be able to define the design to match other design criteria that you use in your business and therefore have a seamless look across your products and services. Colors, logos, and the general look and feel of the newly acquired white label must work with your already established branding. Your customers should believe that the product is made by you and not another company, otherwise your white label is not delivering the added value you are paying for.
You should be able to demo the service before you sign the licensing agreement, or at least have a provision that states you would sign an acceptance prior to fully agreeing to the license agreement. Make sure that you are completely satisfied with the branding of your white label and that it meets your and your customers’ expectations.
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