Original Equipment Manufacturer (OEM) and Value Added Reseller (VAR) Agreements provide enormous opportunities to leverage your marketing and technology assets in offering "total solutions" to the computer needs of your customers. The management challenge is in balancing the interests of manufacturers and developers with the legitimate concerns of your end-users, without increasing your own business risks. The primary tool for achieving this balance is the OEM and VAR Agreement.

The starting point for negotiating an acceptable OEM or VAR Agreement is defining the manufacturer or developer products which are being made available to you. The manufacturer or developer may want to limit your access to certain product lines. These restrictions will only be acceptable to the extent they do not frustrate your marketing objectives. Your product access must be comprehensive enough to address the dynamic needs of your intended customer base. Similarly, your use, packaging and product enhancement rights must be sufficiently broad to leverage your own marketing and technology assets.

Your marketing and technology advancement interests will require the right to package the manufacturer or developer products with your own. Broad distribution and sublicensing rights will be critical to effectively implementing the enhanced technology in your user's environment. Of course, manufacturer and developer royalty payment terms and audit rights will be an equally critical part of this analysis.

Manufacturer and developer assistance may also be critical to your success as an OEM or VAR. Marketing rights allowing use of the manufacturer's logo and advertising materials can provide immediate marketing credibility. These commitments by your manufacturer and developer should be quantified in your OEM and VAR Agreement.

You will also want to carefully evaluate your own performance obligations under the Agreement. Quotas in the form of volume commitments, royalty payments and sales criteria can impose substantial business risks. Territorial limits should be evaluated to determine whether your goals are realistic and achievable within your existing resources. Finally, the termination provisions of the Agreement should recognize your investment by extended notice of termination and buyout provisions.