What’s the Distro Difference?

Master Agencies are looking to rename themselves. Many are looking at the technology distributor label, but that just is not the right term.

We have VADs – value added distributors – already like Tech Data, SYNNEX and Ingram. Distros are simply logistics and distribution. They do not intercede in your income. When you buy a software license or a cloud service from a VAD, they invoice the VAR (partner) and the partner bills the customer. The billing arrangement is between the partner and the distro.

In a master agency model, the master is the broker. They own the contracts. All commissions flow to the master and are paid out to the partner. The master controls the partners’ revenue.

The term for this is BROKER not distro. Like an insurance broker or a real estate broker, the master agency is the contract holder and payee from the vendor. Calling it anything else is kind of misdirecting the relationship. A VAR’s relationship with a VAD is different. Some can say it is similar for licensing but licensing can be moved. It may be a hassle to do so, but it can be done. If a partner wanted to change its broker, it has to sell a new provider to the customer.

There may be some value-adds that a master agency provides it’s partners but mostly it is the contract and commissions. With exclusivity coming back in the guise of investing in partner businesses, MASTER Agency is even more appropriate that distributor. At the least BROKER is the proper term. They don’t bill. They simply hold contracts and collect commissions. What exactly are they distributing?

At least Jenne understands that it is a master agency and a VAD, depending on if it is an agency/commission deal with the partner or a billing one.

Even UCaaS vendors – like NEC, Avaya, 8×8 – understand that it is an agency relationship when it is commissions and a distro relationship when it is sort of white labeled with the partner performing the billing and first line of support.

In the fuss about MASTER being an ugly word, it explains the situation pretty clearly. Not many seem to complain about the sub-agent term but that seems to be a term that the money folks grasp pretty well.

Either way, pick a term that actually defines the relationship, not some marketing fluff that sounds nice or maybe looks better to Wall Street.


When a partner sells to AppSmart or whoever, AppSmart or the Investor/Buyer tries to move as much commission as possible on to their direct agreements. It may be due to better contract terms or it aids in satisfying vendor quotas (in the contracts). Many partners sell through other partners with a huge pass-through (85-100%). They do this for many reasons. When a partner sells the business assets, this is not a desirable arrangement. The broker buying the assets will look to move all that third party commission to their own contracts either at renewal or sooner. The original partner doing the pass-through will end up on the short end of that stick. It will create even more of a mess in the partner community.

Going forward, I will ascertain that the agency I use for a deal has a direct vendor contract. I will also ascertain as best I can that the agency is not looking to sell. There is already enough uncertainty in this business without wondering what financial event is going to trip me up.

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