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How A Partnering Agreement Boosts Trust Among Channel Partners

Partnering Agreement

How A Partnering Agreement Boosts Trust Among Channel Partners

Agreements are one of the most important aspects to consider among channel partners. Not only is this a vital part of the channel ecosystem, but is also the binding factor between partners. In the end, a partnering agreement serves as the ultimate glue and guide during the collaboration of its partners within a big channel.

Due to the complex factors affecting channel partnerships, there can be a lot of inefficiencies in relation to channel partner engagements. The topmost concern among these is the issue of a trustworthy environment. Can your channel be trustworthy enough to honor the partnership? Can your partner be trusted to support the overall growth of your partnership and not just his or her business? These are just some questions that you need to answer truthfully on your own before actually sealing that partnership.

In truth, a trustworthy environment starts with each channel partner representing the actual capacities of his or her company. Second, once they start the process of creating and responding to solutions that address the skill gaps including other aspects of business development, both partners must have a simple but clear agreement that will lay out the rules of their relationship including expectations from each partner. As such, the final partnering agreement must have the approval of both partners.

Having set the foundation on mutual trust, both companies are now set to enter into more detailed discussions about the aspects of the agreement since they have both realized the need for confidentiality and the need to protect this agreement and other important details of the business partnership, especially if you are also planning to enter into other or multiple channel partnerships.

Partnering Agreement, Defined

Partner agreement refers to the written agreement citing the regulating terms of the operation initiated before the start of a partnership. The primary purpose of this legal document is to set the rules and conditions of both partners and the companies they represent. This includes the fundamental legal framework of the partnership, the expectation of each partner to the other, and from this partnership as well as other guidelines for this channel partnership and other future engagements.

This agreement is created to help avoid misunderstandings and boost the success of this collaboration as it states rules on what to do if and when disputes arise. Ultimately, it aims to ensure that both parties collaborate with confidence in a credible and trusted relationship.

10 Elements of a Partnership Agreement

People quite often enter into partnerships without thinking everything through. Unfortunately, this kind of rushed business collaboration ends up unsuccessfully if not bitterly for both partners. To increase your chances of entering into a successful partnership, there are some fundamentals that you can follow.

First, you have to realize the importance of entering into a partnership agreement only with a person you can trust.  This entails getting to know your partner. Do a background check on each prospective partner before you even entertain the idea of partnering with him or her.

Second, coming up with worst-case situations is another must-do for you both. This allows you to address probable issues and nip them in the bud even before they even start growing. This will become the operating agreement that will serve as your guiding principles during your partnership.

Here are the primary elements of a partnership agreement.
  1. Authority and Signatory Roles: This states the power or authority that each partner is given and is expected to perform as the representative of the business.
  2. Duties and Responsibilities: This clarifies the designated job duties and responsibilities of each partner and the consequences in case he or she does not perform as expected or commits violations.
  3. Capital Contributions: This refers to the capital or other assets that each partner invests in the partnership.
  4. Rights to Accept Distributions: This states the percentage of a partner’s contribution that can be returned to him or her and under what circumstances will these be.
  5. Voting Procedure: This clarifies the instances that require the unanimous vote of all partners involved.
  6. Dissolution Strategy: This lists the possible events that will result in the dissolution of the partnership.
  7. Buy-Sell Provision: This provides the conditions in case one partner decides to leave the partnership, dies, or has life-changing experiences that will result in him or her having to sell his or her shares of the partnership.
  8. Expulsion Provision: This states the reasons or circumstances which will qualify for a partner to be forced to leave the company.
  9. Noncompete Provision: This cites the details in case a business partner leaves the company and the limitations agreed upon.
  10. Miscellaneous Provision: This covers how other legalities and fees will be handled.

Also, since each partnership is unique, other issues that do not fall under any of the components above can be added to achieve the perfect partner agreement for your business.

Importance of Partnership Agreements

As trustworthiness is the primary element of all partnerships and will mitigate some risks for your business, it then makes sense to make sure that this collaboration will have positive results, especially in terms of ROI and business growth. Creating a sound agreement establishes and strengthens each partner’s trust while creating a secure environment that boosts confidence in entering into the partnership.

A partner agreement must be crafted not only to establish the collaborative guidelines but also to enable both parties to fully trust one another. With this protection in place, other negotiations will surely be easier to decide including other projects that will further the success of your business.

Here are also some other advantages afforded by a solid agreement:
  • Defining “success” of your business.
  • Assigning the partner responsible for which deliverable.
  • Duration of the partnership.
  • Length of time required to give notice to the other partner should one partner decide to leave or dissolve the partnership.

The information above is often addressed under the termination of the agreement. Thought it sounds pessimistic to think about these during the start of your partnership, you will realize the importance of anticipating all odds so that you have actions or solutions in place if or when these arise.

Other benefits that partnering agreements provide include:
  • Stating expectations of each partner
  • Designing a framework that encourages good working relationship
  • Assigning roles and accountabilities
  • Protecting sensitive and confidential information
  • Creating transparency and boosting honesty
  • Citing repercussions in case of legality, liabilities and violations
  • Mitigating partner disputes, and/or
  • Outlining guidelines in case of additional partners
Three Key Elements Of A Good Partnership Agreement

Three Key Elements Of A Good Partnership Agreement

With so much to consider during the setting of your partnership agreement, here are the three most important components that you should focus on the most at this time.

  • Confidentiality – Secures the sensitive client data shared by each partner so that this information is protected from misuse or third-party sharing.
  • Non-Circumvention – Safeguards each partnering party from being bypassed by the other party in reaching prospective clients directly.
  • Off-Ramp – Addresses the partnership and its future relationship including establishing procedures when the partnership comes to an end, creating a clear designation of the rights and obligations of one partner to the other partner.
How Should Agreements Work?

In any business, security and privacy must always be prioritized and must be crafted to ensure the protection of all partners. You must be sure to provide equality through fair and accurate representation to each and every partner.

1. Create and Establish Trust

Take your vetting procedure seriously, and this starts with the Terms of Use section of your agreement. When registering, both partners and their companies must enter into the agreement dictating that they will only provide representation to their true and updated profiles. This can also be enhanced with a feedback option that allows previous partners or channel members to endorse companies that they previously worked with. As a result, this enables partners to have ways to check or verify the skills and credibility of prospective partners.

2. Confidentiality

Confidentiality is also equally important and must be given the emphasis on. As such, you must assure and ensure your partners and end-users alike that whatever they shared with you will never be shared with third parties. What’s more, no information was shared before entering the agreement. Only upon the entry and registration of the agreement will you need to input any information and this will be to start the partnership already.    Confidentiality

3. Added Screening

You must also provide chances of further screening so that prospective partners can be further assessed, especially if there is a need to. A viewable company profile can be checked so you can verify whether they have the capacities they initially professed to have are really true. This includes skill sets or listed certifications earned must also aptly showing their skills having done your due diligence in checking and vetting all information provided during the registration.

4. Interviewing And Safeguarding The Partnership

When you have finally chosen who to partner with, your channel must already have an initial partnering agreement ready. Note that every partner has already confirmed their agreement on the terms and conditions, data protection and privacy sections. There are vital areas covered in a sound agreement:

  • Scope of Agreement
  • Confidentiality
  • Terms and Termination
  • Non-Solicitation
  • Non-Circumvention
  • General and Specific Liabilities

Know that your partnering agreement is actually the initial step required to increase opportunities and success. The initial agreement addresses the issues of confidential information and a more open discussion of abounding opportunities. At this point, you must be able to see if a partnership between you will make sense or not. When partnerships mature, there may need to discuss other agreements such as service level, subcontracting, and nondisclosures.

The Bottom Line

Empowering your channel partners to engage in a great partnership environment will be very advantageous for your business and its success. Providing the means to fully understand why entering into a partnership agreement with you will be their best choice is very important and a wise decision to make. To achieve this, you must invest in time and effort to get the agreement right so both you and your partner can reap huge dividends someday.

In this modern-day where all companies must concentrate on procedures to avert security issues, gain insights from the data you acquire, and deal with some cloud hosting or others, creating a solid partnership agreement is very important so that you can provide comprehensive solutions to your clients. For this reason, working together as partners to create a trust-building partnership agreement right from the start is very imperative.


Know how you can benefit from when entering into a partnering agreement with the Forzadash community and its various multi-sectorial channel partners. To schedule a meeting, call here today!

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