In the fast-paced world of SaaS, forging strong partnerships can be a game-changer for growth. But like any successful relationship, a healthy partnership requires a solid foundation. That’s where a partnership agreement comes in handy. This isn’t just legalese – it’s a roadmap to mutual success, outlining expectations, responsibilities, and the path to achieving shared goals.
That being said, putting together a partnership agreement is no easy feat. It needs to be well structured and easy to digest, with the ability to be constantly updated to align with the company strategy and partner program, mitigate company risks, and drive the right partner behavior.
Drawing on our vast experience at monday.com in building and developing partnership agreements, here are some useful tips for approaching this topic.
Company stakeholders
The company stakeholders that typically contribute to the development of partnership agreements are the partnership leaders (well versed in the strategy and direction), legal, finance, security, and BizOps. Additional contributors might come into play depending on the company and program stage, but these are the main ones.
Roles and responsibilities
Clearly defining the roles and responsibilities of both parties is essential. In accordance with your company’s strategy or partner program, the partnership agreement should reflect the partner’s operational rights on either an exclusive or non exclusive basis, outline the geographical territories of the partnership, and specify how a partner should promote your products or services. On the company’s side, instill confidence in your partners by being responsible to making the products or services available and notifying them of changes.
Communication and monitoring
It is important that your partnership agreement includes the appropriate communication methods and channels to keep partners updated. It is further essential to outline your company’s approach to reviewing partner activities and performance, while making sure both sides are constantly aligned on goals and expectations. Make sure to maintain flexibility in the agreement to update the forms of communication and partner reviews as those can change over time.
Intellectual property
Intellectual property clauses are crucial to protect both parties’ proprietary information, including trademarks, copyrights, and patents. The partnership agreement must ensure each party’s ownership of its existing intellectual property and provide the appropriate safeguards for these rights, including against misuse and infringement. Additionally, the partnership agreement should outline how partners are permitted to use your company’s intellectual property for marketing and selling your products or services.
Marketing activities
To protect your brand and ensure partners’ marketing efforts will be in line with your company’s marketing strategy, the partnership agreement should detail your company’s “Do’s and Don’ts” when promoting your products or services. This can include the use of authorized marketing materials, compliance with applicable advertising laws and restrictions and obtaining prior consent before making changes to your messaging and materials. Additionally, if your company established clear brand guidelines, it is important to ensure your partners are obligated to follow such guidelines to maintain a consistent brand image across different channels.
Incentives and payment terms
This is one of the most important sections of any partnership agreement. It should include the compensation method to reward partners for their sales efforts, including any commission rates or discounted prices (commercial terms can also be supplemented by a referenced partner program brochure). You should also specify payment terms and applicable tax consequences.
Liability
In line with the roles and responsibilities defined in your partnership agreement, setting out each party’s liability obligations will help mitigate the risks of both parties and provide protection from bearing unexpected costs.
Term and termination
Setting the duration of the partnership agreement is a must, whether it is for a fixed period (e.g. one year) or open-ended. Additionally, conditions for terminating the agreement by either party should be outlined, such as breaches of contract (i.e. termination for “cause”) or termination at free will (i.e. termination for “convenience”) including the prior notice required before such termination comes into effect – typically 30-90 days, depending on the partnership. It is also paramount to add a section that will specify the effect of the termination, including transition policies or continuity requirements, cessation of rights and final payments.
Confidentiality
A confidentiality clause is essential to build a trustworthy and transparent partnership. It establishes the fundamental rules for safeguarding each party’s sensitive and valuable business information from unauthorized disclosures. It is important to define what constitutes confidential information, how such information should be protected as well as with whom and under what conditions it can be disclosed.
Compliance
Although partners are independent entities, they still represent your company and act on your behalf. It is important to emphasize the partners’ obligation to comply with all applicable laws, including those pertaining to anti-bribery, anti-corruption, antitrust, and privacy.
Alignment with partner program
When structured properly, partnership agreements can also be useful to constantly align partners with your partner program strategy and terms. As an extension to the partnership agreement, vendors can incorporate references to external program brochures including specific commercial requirements and benefits (tiering systems, commissions, MDF, vendor support, etc.). Vendors can further maintain flexibility through the agreement to release additional partner program policies and guidelines from time to time, which partners will be required to adhere to.
Partnership agreement changes
With the evolution of your company and partnerships strategy, it is highly recommended to revisit your partnership agreements periodically and ensure that the terms are constantly aligned with your current needs. Some examples that could trigger agreement updates are regulatory updates and changes, changes to the payment method or terms and additional activities or changes of scope in partner’s responsibility. At monday.com we recently transitioned to lean online partnership terms with our more advanced Solution Partners – they are required to accept them only once when joining our program, after which we simply notify them of changes made to the agreement. Instead of having to resign an entire agreement or addendum with every minor change, the online terms approach makes our partnership agreement dynamic and streamlines future advancements.
Conclusion
Building and nurturing partnerships can be highly complex. To reduce the potential for misinterpretations, friction points or conflicts that can severely harm the relationship, the creation of effective partnership agreements is a necessity.
Partnership agreements should not be frowned upon or considered merely as a legal burden. Aside from formalizing the business relationship with your partners, partnership agreements lay the groundwork for successful partnerships. Investing in structuring mutually beneficial partnership agreements is a crucial element for building and scaling your partnership ecosystem.
Due to the importance of partnership agreements, it is best to work with legal professionals who will ensure they comply with any legal requirements and in line with your company’s needs.
The information provided in this article is for general information purposes only. This article does not constitute or contain legal advice and is not an alternative to legal advice from an attorney or other legal professional. Reader is advised and encouraged to supplement any information provided herein with the advice of an attorney or other professional advice.
This article was co-written by:
Roi Bar On (Head of Partnerships GTM Strategy & Partner Development)
Merav Rosenbaum (Senior Legal Counsel)
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