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What is a software whitelabel agreement? It is the arrangement by which a software developer allows their product to be offered under the brand of another company. The purchaser sells the software to end customers under their own name and logo, while the developer remains in the background. The underlying technology, the copyright, and usually the management remain with the developer. The agreement specifies who uses which brand, who is responsible to the end customer, and who holds the intellectual property.
The short answer
- A white-label agreement stipulates that the purchaser sells existing software under its own brand.
- The developer retains the copyright and the source code; the customer receives a license plus the right to their own branding.
- Towards the end customer, the purchaser acts as supplier and point of contact.
- Agreements regarding uptime, support, pricing, and liability must be explicitly included in the contract.
- If the software processes personal data, a data processing agreement is required pursuant to Article 28 of the GDPR.
What exactly is a software whitelabel agreement?
With whitelabeling, the developer delivers a ready-made product that the customer equips with their own name, logo, and corporate identity. The end customer sees only the customer's brand and often does not know that another party is behind it. This differs from custom development: no new software is built, but existing software is rebranded under a different label.
Copyright on software falls under the Copyright Act. The lawful user may use the software for the intended purpose (Article 45j of the Copyright Act), but ownership remains with the creator unless it is expressly transferred. In the case of white-label software, transfer is precisely not the intention: the developer wants to retain their technology and be able to supply it to multiple parties. The purchaser therefore receives a usage and distribution license, not ownership.
Why do companies choose white label
- Get a product to market quickly. The buyer does not have to develop it themselves and can immediately sell under their own brand.
- Focus on the customer relationship. The buyer builds their brand and customer base, the developer builds the technology.
- Recurring revenue for the developer. Multiple customers can market the same software under different brands.
- Scalability. A single codebase serves multiple markets without separate development tracks.
The downside is that responsibilities become blurred if you do not document them. The end customer turns to the buyer, but the fault lies in the developer's software. Without clear agreements regarding support and liability, hassle ensues.
Who is responsible towards the end customer
This is the heart of every white-label agreement. Outwardly, the purchaser is the supplier: they enter into the contract with the end customer, issue invoices, and are the primary point of contact. Behind the scenes, the developer delivers the service. The agreement must therefore regulate:
- Which support levels the developer guarantees to the customer (response times, uptime, maintenance windows).
- How malfunctions are escalated and within what timeframe they are resolved.
- Who is liable if the end customer suffers damage due to an error in the software.
- Whether the developer is allowed to approach the end customer directly (usually not, to safeguard the brand experience).
A practical example: an accounting firm offers its clients online time tracking under its own name. The software comes from an external developer. If the service is down for a day, the clients call the accounting firm. The white-label contract states that the developer guarantees an uptime of 99.5 percent and addresses malfunctions within four hours, so that the firm knows what it can promise its clients.
Intellectual property and trademark use
Two layers of intellectual property intertwine here. The copyright to the software remains with the developer. The trademark, logo, and trade name used by the purchaser remain the property of the purchaser. The agreement must stipulate that the developer may incorporate the purchaser's trademark into the interface, and that the purchaser may only distribute the software under the agreed conditions.
What happens at the end of the contract is also important. May the purchaser continue using the software for existing end customers, or does the license terminate immediately? Does the purchaser retain their customers' data? These exit agreements prevent an end customer from falling between the cracks.
Privacy and Data Processing Agreement
If the software processes personal data of end customers, the division of roles under the GDPR is relevant. Often, the end customer or purchaser is the controller and the developer the processor. For this situation, Article 28 of the GDPR prescribes a data processing agreement, with agreements regarding security, retention periods, sub-processors, and data breach notifications. In a white-label chain, the developer is usually at the bottom as a (sub)processor, so these agreements must be comprehensive throughout the entire chain.
Honest recommendation
If it concerns a simple collaboration with a trusted regular partner, and the amounts are limited, a clear standard agreement and a good data processing agreement can get you a long way. In that case, a lawyer is not always necessary. However, as soon as you start reselling the software to many end customers, or as soon as downtime could cause direct damage to those customers, the allocation of liability and the exit arrangement become the difference between a healthy and a risky partnership. In that case, have the contract reviewed by someone familiar with white-label structures, because the developer's standard terms and conditions are almost always drafted in their own favor.
Want to know more about the content and costs? View the software whitelabel agreement, read exactly what is included in drafting a software whitelabel agreement and what it costs to have one drawn up.
Frequently Asked Questions
It is the agreement by which a developer allows their software to be offered under the brand of another party. The purchaser sells the software to end customers under their own name, while the copyright and technology remain with the developer.
The copyright to the software remains with the developer. The purchaser receives a license to use and resell the software under their own brand, not ownership. With whitelabel, the transfer of copyright is precisely not the intention.
Externally, the customer is the supplier and the point of contact. Internally, the developer contributes through agreed support levels and liability agreements. Specify who bears which damages if the software fails or contains an error.
With whitelabel, existing software is continued under a different brand. With custom development, you have new software built that is tailored to your specifications. With whitelabel, the developer retains the technology; with custom development, however, you can agree that the copyright to the code transfers to you.
If the software processes personal data, the purchaser or end customer is usually the controller and the developer the processor. Article 28 of the GDPR then mandates a data processing agreement with agreements regarding security, sub-processors, and data breaches.
That depends on the exit clauses in the contract. Stipulate whether the purchaser may continue to use the software for existing end customers, how the data is transferred, and what notice period applies, so that end customers are not left without service.
For companies that want to quickly offer a software product under their own brand without developing it themselves, such as consulting firms, agencies, or service providers looking to offer their clients an additional tool. The developer benefits from recurring revenue through multiple customers.
