Draft for Tamir's review. Not published.
Model it at your volumes
Model the share against a license at three growth scenarios over the term. Use realistic volumes for your own sites or routes rather than the proposer's figures. Look for minimum volumes, rate changes and the vendor's right to add fees.
Ask for a cap on the share, or a conversion to a license above a volume threshold. For exclusivity, weigh the better rate against the cost of being unable to switch if service or rates slip.
Keep your customers and your exit
Keep ownership of customer accounts, identity and history. License only what the partner needs to sell and display, and get the sales and usage data back in a usable format. Limit what it can derive, resell or keep after termination.
Require an exit that keeps customers served while you change providers, with transition support. Ask what happens to the terms if the vendor is acquired or leaves the market.
Depending on your seat
If you're on the board and revenue will flow through the vendor's platform for years, require reconciliation data you can check without the vendor. Require audit rights, service measures tied to revenue loss, and a mid-term review of terms.
If you're the CEO deciding between owning the capability and an operator deal, own it only if it shapes how customers see you. You also need someone ready to run the software, payments and support. Otherwise take the deal, with terms on data, pricing control and exit.
What to check before you decide
- Model the share against a license at three growth scenarios over the full term.
- Check who owns customer accounts, transaction history and the app brand at exit.
- Look for minimum volumes, exclusivity scope and the vendor's right to change rates or add fees.
- Ask for a cap on the share, or conversion to a license above a volume threshold.
- List each data field the partner asks for and its purpose, and strike fields without one.
- Require full sales and usage data returned to you in a format your systems can use.
- Require an exit with transition support so customers are not stranded.
Questions people ask
Board approving a ten year contract where our fare revenue flows through the vendor's platform, what controls should we require?
Require independent reconciliation of revenue, audit rights over the platform, performance measures tied to revenue loss, financial stability covenants, and an exit that keeps collecting fares. Ten years needs the right to re-open terms. It depends on how much revenue flows through the platform and on what the authority requires of the company.
Software vendor offers the platform for a share of every booking instead of a license fee, is that a good deal?
Price it at your growth plan over the contract term and compare with a license; revenue share usually wins for small volumes and loses badly at scale. Check what you own at exit, because revenue share deals often keep the customer data and the app with the vendor. It depends on your expected volume, the term and the exit terms.
Should my retail chain own EV chargers and the software or let an operator run them for a revenue share?
Own the chargers only if charging is part of how you want customers to see your sites and you are ready to run software, payments and support. Otherwise take the operator deal, with terms on data, pricing control and exit. It depends on your site footprint, your customers' dwell time and whether anyone in the company can own the operation.
A payments and roaming provider offers better rates for exclusivity on our charging network, should I accept?
Exclusivity is acceptable only with a short term, rate protection, service commitments and an exit that keeps drivers charging. Model what the better rate is worth against the cost of being unable to switch if service or rates slip. It depends on the share of your sessions that go through roaming and on how long the term is.
Signing a data and ticketing deal with a mobility app aggregator, what terms protect the operator?
Keep ownership of passenger identity and trip history, license only what the aggregator needs to sell and display, and get the sales data back. Limit what the aggregator can derive, resell or keep after termination. It depends on how much of your ridership would reach you only through that app.
How I can help with this decision
- Ask or talk (Free)
- I give my view on where deals like this usually turn costly, and which terms in your draft hand over the customer relationship.
- Review (Pay if it was worth it)
- I write an independent review of the deal's economics, data rights, ownership and exit terms against your plan. I recommend to sign, restructure or decline, and what to change before signing.