The tricky side of brand partner agreements
Thursday, January 18, 2018
Because of the pressures on product markets and the increasingly nimble landscape of e-commerce, a manufacturer's partners are vital links in the chain of success.
Without establishing in advance a clear understanding of partners' expectations and goals, things may be trickier than they need to be. Setting out these expectations in an effectively tailored agreement is key — whether you are a startup or an established company that needs to refresh its expectations with its partners.
Across industries, these agreements can take many forms: a brand partner agreement, a simplified partner agreement, vendor compliance agreement, distribution agreement, master terms and conditions, to name but a few. A company may grant a partner the right to sell, purchase, promote or even resell its products.
The variations are potentially endless, but the main point is to clearly put in writing what the manufacturer and partner expect out of the relationship. Many issues related to how partners sell your products may impact the value of your brand and trickle downstream through these agreements.
Here are some thoughts about the type of agreement to use and how the increasingly nimble worlds of marketing and branding play at the outset.
A manufacturer has to decide early how to frame its core branding message and the expectations for its sales channels as to which of these agreements are appropriate for it. An early focus on branding issues and their complex interplay in media and advertising regulations is crucial.
The type of product, what claims can be made about it, what materials and supplier information can be stated to brand partners or consumers, and what claims a manufacturer can substantiate are key. A partner or vendor needs to keep within these appropriate bounds. Sales channels may touch on these points in advertising through social media, influencers, independent contractors, their own ecommerce sites, permanent locations, pop-up stores, and other traditional methods.
For instance, nutritional supplement, food and cosmetic companies increasingly focus on the source of raw ingredients and how partners communicate their benefits as part of a product's claims and wellness or clean-labeling initiatives. Setting out a framework that gives vendors room to work their magic but stay within bounds of what is appropriate for the product and brand is essential.
It is increasingly difficult to predict all the different pressures on branding in the social media space for manufacturer and partners. Constant adjustment to product advertising occurs as vendors look to reach desired audiences through tweaks in algorithms on Facebook and the pushes of best tweets on Twitter and Instagram feeds. Whether partners and vendors can place a product on these feeds, how it is shown and other issues are a changing landscape.
For instance, a partner may promote a product alongside extreme content on various feeds or in video feeds in a context with which the brand disapproves. How far and the amount of individualized control a partner has over how the product is promoted should be thought out carefully and addressed in these agreements as there may be significant legal barriers to restricting vendors from certain types of advertising.
As a manufacturer looks to develop these written agreements with its partner framework, what are the different options it should carefully consider in addressing these issues?
One option is the individual partner agreement. Manufacturers often use a uniform written distribution or brand partner agreement with vendors. There is a wide variety of detail that may be included.
Some agreements merely lay out the simple terms of granting a right to sell to a vendor, nuts and bolts on resales or returns, size and contents of units, how to handle samples, and pricing. However, different places have rules and prohibitions on certain suggested minimum retail pricing, which can be a particularly tricky web that a manufacturer should investigate before entering into any pricing agreements.
Figure out what you can and cannot do in your locations. The simple individual partner agreement can work well as long as the obligations are clear.
Some manufacturers prefer a master service agreement as opposed to individual brand vendor partner agreements. This approach can work in the right circumstance but can be tricky because the master draft may require a separate addendum be added for each partner to set out any unique points.
If the terms in the master agreement are not specific enough — especially where a manufacturer has a reach across multiple locations — this type may not work best. Manufacturers should be especially considerate of evaluating whether this type of agreement would be useful.
Some companies use a vendor manual laying out the company's mission as a companion to individual partner agreements. Manufacturers, particularly those focused on social awareness or transparency issues, should consider vendor manuals setting out specific branding expectations.
These manuals can spell out more of the product's story, its unique product claims, and provide the vendor specific expectations and goals for the product lines. They can include checklists for the vendor relationship, and they can also provide a good vehicle for putting in lengthier tool kits for the vendor to stay on target with the product or brand mission.
All these types of writings are tools to have a clear reference for the manufacturer and partner to rely on during the relationship to keep on target. If something wanders off course, it is imperative to have clear terms to refer to get things back on track.
As long as the information provided is accurate and specific product claims can be substantiated, a manufacturer will go a long way in ensuring its sales channels are on the same path as it for the brand and minimize the risk of running afoul of any regulatory requirements.
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