Broadcom Enterprise Licensing – Contract Clauses to Defend

Broadcom Enterprise Licensing – Contract

Broadcom’s VMware contracts aren’t just pricing tools — they’re long-term control mechanisms.

Once signed, these clauses dictate your renewal leverage, audit exposure, and exit options. Broadcom’s shift to subscription-based enterprise agreements means every clause now carries weight.

This guide highlights the contract clauses that determine who truly controls your licensing future—from audit rights to renewal mechanics—and how to defend each one.

Pro Tip: “The cost of a bad clause isn’t paid today — it’s paid every renewal.”

Why Clause-Level Negotiation Now Matters

Broadcom’s new subscription model for VMware has reduced flexibility and raised renewal dependency.

Clauses that seemed harmless in the old perpetual license world now carry serious lock-in and cost-escalation risk under multi-year subscriptions. Every legal term has become a battleground for vendor control. If you focus only on price and ignore the fine print, you could be signing away leverage for years.

Short-term discounts mean little if the contract language tilts everything in Broadcom’s favor. Clause-level negotiation now matters more than ever because it’s where future costs and risks are baked in.

A single overlooked clause can leave you with surprise audits, automatic price hikes, or no way out of an unwanted renewal.

Pro Tip: “Commercial discounts mean nothing if the contract is written against you.”

The 10 Clauses That Define Your Leverage

Below are ten critical clauses in Broadcom’s VMware enterprise agreements.

For each, we outline Broadcom’s typical stance and the customer’s defensive position. Protecting these areas ensures you maintain control over your licensing and budget throughout the relationship.

Clause 1: Audit Rights

Broadcom’s Version: Broadcom seeks broad audit rights – often unlimited access with minimal notice. They want the ability to audit your usage at any time, with you covering any compliance gaps (sometimes at full list price plus penalties). The scope is usually wide, potentially covering all environments and indirect usage.

Customer Defense: Negotiate strict limits on audit rights. Allow at most one audit every 24 months, require at least 30 days’ written notice, and define the scope to specific licensed products (SKUs) and the current term.

Include confidentiality provisions to ensure that any data gathered is used only for compliance verification and kept confidential. If possible, add a clause that no audits occur during active renewal negotiations – preventing surprise audits from being used as pressure.

Also insist on fair remediation: any shortfall should be addressed by purchasing the necessary licenses at contract-discounted rates (no punitive list prices or fees). Requiring independent verification of audit findings can further protect against exaggerated claims.

Pro Tip: “The broader the audit clause, the faster you lose pricing leverage.”

Clause 2: Price Increase Caps

Broadcom’s Version: Broadcom’s contracts often allow annual price increases at its discretion (e.g., “then-current list pricing”). In other words, after your initial term, renewal prices could jump dramatically with no cap – essentially whatever Broadcom’s list price is at that time. This leaves you exposed to large uplifts every year or at renewal.

Customer Defense: Insist on a clear cap on price increases. For multi-year deals, fix the pricing for the full term – no mid-term increases. For renewals, cap any annual uplift at, say, 3–5% or tie it to a standard inflation index (like CPI).

Even better, negotiate that the renewal pricing will honor the same discount percentage you initially received, applied to the then-current list, to prevent losing your negotiated savings. The goal is to remove Broadcom’s ability to impose uncapped “surprise” hikes after you’re locked in.

Pro Tip: “Uncapped pricing is just deferred overpayment.”

Clause 3: Subscription Term & Commitment

Broadcom’s Version: Broadcom favors multi-year, non-cancellable subscriptions. Once you sign, you’re committed to pay for the full term (often 3+ years) with no reductions, even if your needs change. The agreement might lack flexibility to drop licenses or products, and could automatically renew if not actively terminated. Broadcom’s leverage comes from knowing you can’t easily escape or downsize.

Customer Defense: Push for flexibility in long-term commitments. Negotiate the right to early termination or partial cancellation under defined conditions – for example, the ability to drop a portion of licenses after a year or two with notice and a pro-rated credit or fee. At minimum, secure the right to not renew at the end of the term without penalty (no automatic rollovers).

Include a provision that Broadcom must give a renewal notice well in advance (e.g., 90-120 days) with a quote, so you have time to decide. If your business changes (merger, divestiture, technology shift), you should have options: the contract could allow swapping unused licenses for other products or scaling down at renewal.

In short, commitment shouldn’t mean captivity – build in escape hatches or the ability to adjust course.

Pro Tip: “Commitment without flexibility equals vendor control.”

Clause 4: Termination Rights

Broadcom’s Version: The standard Broadcom contract often allows termination mostly in Broadcom’s favor. Typically, the vendor can terminate for your material breach (with a minimal cure period). Still, as the customer, you have no right to terminate for convenience and limited rights even for cause. In other words, you’re stuck unless Broadcom decides otherwise, even if service is poor or your strategy changes.

Customer Defense: Demand mutual termination rights and a fair cure period. If either party materially breaches the contract, the other party should have the right to terminate, with, say, 30–60 days to cure any breach before it becomes final.

For critical failures (like Broadcom not delivering services or persistent SLA violations), negotiate the right for you to terminate if the issue isn’t fixed. You likely won’t get a pure “termination for convenience” (i.e., exit anytime without cause) from Broadcom, but raising it can lead to compromises.

At least ensure you’re not locked in with no remedy if Broadcom underperforms or if there’s a major change in your business. Termination clauses are the safety valve – fight for one you can use when needed, not a one-sided trap.

Pro Tip: “Termination rights are your last line of defense when negotiations stall.”

Clause 5: Transfer and Assignment

Broadcom’s Version: Broadcom’s default language prohibits transferring licenses or the agreement without their consent. This means if your company undergoes a merger, acquisition, reorganization, or divestiture, your licenses could technically become invalid unless Broadcom approves a transfer. They hold veto power, which can be used to force new licensing or fees during corporate changes.

Customer Defense: Ensure your contract includes flexible transfer and assignment rights. Specifically, carve out that you may transfer licenses or the entire agreement to an affiliate or successor in a merger/acquisition without unreasonable withholding of consent by Broadcom.

Ideally, make it automatic for standard corporate moves: if your company is bought or you acquire another, you shouldn’t have to re-negotiate licenses. Also include rights to split or assign licenses in a divestiture (spin-off) so the spun-off entity can continue using the software under your contract portion.

The language to add might be that Broadcom’s consent “shall not be unreasonably withheld, conditioned, or delayed” in these events. The goal is to make licenses as portable as your business – otherwise every reorg or M&A event becomes a chance for Broadcom to demand a fresh deal.

Pro Tip: “Without transfer rights, every reorganization becomes a relicensing event.”

Clause 6: Indemnification

Broadcom’s Version: Broadcom’s standard indemnification often protects itself but not you fully. For example, they might only indemnify you for third-party intellectual property claims in narrow circumstances, or they may place more burden on the customer (like you indemnifying Broadcom for misuse of the software). This one-sided indemnity shifts risk to the customer: if there’s an IP lawsuit or a damage claim, you may not be adequately shielded

Customer Defense: Make indemnification mutual and balanced. At a minimum, Broadcom should indemnify you for any intellectual property infringement claims related to using their software (so if a third party claims VMware infringes a patent, Broadcom covers the defense and any settlements). Likewise, you might indemnify Broadcom against third-party claims arising from your misuse or combination of the product.

Ensure liability is capped for both sides – no open-ended liability that could bankrupt either party. The idea is to share risk fairly: each party protects the other where it has control (Broadcom for the product’s IP, you for how you use it), with reasonable limits on the financial exposure. Don’t accept a clause that makes you carry all the legal risk for using Broadcom’s software.

Pro Tip: “Mutual indemnity is standard among equals — unilateral means risk transfer.”

Clause 7: Data Access & Confidentiality

Broadcom’s Version: Broadcom often includes language allowing them to access usage data or telemetry from your systems, ostensibly for support, analytics, or license compliance. Without safeguards, this could mean that Broadcom can collect detailed data on your environment and usage patterns. They may also want the right to share anonymized performance data or use it to optimize services. While these can sound benign, broad data access rights can be misused – for example, to look for upsell opportunities or compliance issues.

Customer Defense: Lock down what data Broadcom can access and how they can use it. Specify that any data collected must be limited to what’s necessary for support or audit compliance, and even then, it should be sanitized or anonymized whenever possible.

Prohibit Broadcom from sharing your specific data externally or using it for any sales advantage. Ideally, prior notice is required before any data gathering beyond routine support diagnostics. If Broadcom wants to run any scanning tools or collect telemetry, you approve the scope and timing.

And of course, maintain a strong confidentiality clause: all information about your systems and usage is confidential and cannot be used outside of compliance verification. This prevents your data from becoming Broadcom’s leverage.
Pro Tip: “Audit data is leverage — don’t let Broadcom weaponize it.”

Clause 8: Renewal & Auto-Renewal

Broadcom’s Version: Broadcom’s contracts might include auto-renewal language, where, unless you cancel in advance, your subscription renews automatically (often on a yearly basis) at the “then-current” price (list price).

If the contract is silent, local law might even allow auto-renewal. This means you could be rolled into another term with a price jump by default. Additionally, Broadcom may only provide a renewal quote late in the cycle, limiting your time to negotiate or cancel.

Customer Defense: Take control of the renewal process. Strike or disable any auto-renewal clause – require that renewals are opt-in, not automatic. If an auto-renew provision remains, negotiate that it cannot happen without Broadcom providing written notice and a quote at least 90 days (preferably more) before the term ends, giving you a window to decide.

Also, define the pricing for renewal upfront: for example, “renewal will be at a X% discount off the current list, matching the original discount.” This way, you won’t be shocked by a full list price renewal. By making renewal a deliberate decision point rather than a default, you force Broadcom to re-earn your business and prevent a stealth price increase.
Pro Tip: “Auto-renewal is a quiet tax — stop it before it triggers.”

Clause 9: Governing Law & Jurisdiction

Broadcom’s Version: Broadcom typically specifies that the contract be governed by California law (or another vendor-favorable jurisdiction) and that any disputes be resolved in their home courts. This is not accidental – vendors choose jurisdictions where they find the laws and courts more favorable to their interpretations (for example, more sympathetic to software license enforcement). For a global enterprise, this could mean you’re fighting on Broadcom’s home turf if a dispute arises.

Customer Defense: Negotiate for a neutral or home-field jurisdiction. If your company has a strong preference (e.g., your country’s laws or a neutral venue like New York, London, etc.), propose those for governing law and dispute resolution. At the very least, avoid being locked into a location heavily favoring the vendor. If you operate in multiple regions, you might push for arbitration or split jurisdiction clauses that are fair to both parties.

This clause can determine which side has the legal home advantage in any serious disagreement – and you want a level playing field. Don’t overlook it as “boilerplate,” because it could affect the outcome of any contract fight before it even begins.
Pro Tip: “Jurisdiction determines who wins before the fight begins.”

Clause 10: SLA and Service Availability

Broadcom’s Version: Broadcom’s standard agreements (especially for cloud services or support) might lack specific Service Level Agreements (SLAs) or remedies. Often, the contract will be vague about uptime or support response times and offer no credits or penalties if service is subpar. If VMware products or services go down, you may have little recourse under the default terms. Broadcom prefers not to be on the hook for strict performance guarantees.

Customer Defense: Define minimum service levels and remedies. Negotiate an SLA appendix if it’s a cloud or hosted service – for example, 99.9% uptime for critical services – and set service credits for missing those targets (credits that apply to future invoices). For support services, establish response time commitments for critical issues. If Broadcom balks at formal SLAs, at least document any promises of performance or support quality in the contract.

The key is to have a measure of accountability: if Broadcom’s service fails consistently, you deserve a form of compensation or the right to terminate. Without an SLA, you carry all the operational risk of outages or poor support.

Make it Broadcom’s responsibility to meet defined service standards, not just a “best effort” with no consequences.
Pro Tip: “SLAs aren’t about penalties — they’re about accountability.”

Critical Broadcom Clauses – Vendor vs Customer Position

Pro Tip: “Every unchecked clause becomes a weapon at renewal time.”

Checklist – Top Negotiation Defenses

• Limit audit frequency and scope – e.g., one audit per 18–24 months, specific products only, 30 days’ notice.
• Require renewal quotes 90+ days before expiration to avoid last-minute surprises and prevent automatic rollovers without consent.
• Cap price increases – set a maximum annual uplift (≤ 5%) or lock prices for the full term of a multi-year deal.
• Secure transfer rights in M&A – ensure you can assign licenses during mergers, acquisitions, or divestitures without vendor veto.
• Mutualize termination and breach terms – include cure periods and allow termination on your side for Broadcom’s material breach or non-performance.
• Define SLAs and service credits – don’t accept vague promises; put uptime guarantees and remedies in writing.
• Tighten data use and confidentiality – restrict Broadcom’s access to your usage data and forbid them from exploiting it beyond compliance needs.
• Neutralize governing law – choose a fair governing law/jurisdiction so disputes aren’t automatically tilted against you.

Pro Tip: “Check your signature block — the wrong clause often hides in the appendix.”

Optional – Example Negotiation Language (Illustrative)

Sometimes the best way to convey your intent is with sample contract wording.

Here are a couple of example clauses that show a more customer-friendly approach. (Use these as inspiration to guide your legal team – they set the tone but should be tailored to your situation.)

Audit Clause Example (Customer-Friendly):

“Vendor may conduct a license audit no more than once every 24 months, only for products licensed under this agreement. Vendor must provide at least 30 days’ written notice and conduct any audit during normal business hours. Audit scope will be limited to verifying compliance for the licensed software and the current subscription term. The audit shall minimize disruption and maintain confidentiality of Customer data. Findings will be shared with Customer, and Customer shall have 30 days to resolve any license gap by purchasing additional licenses at contract pricing, with no additional penalties.”

Price Cap Example:

“Prices are firm for the initial subscription term. Any renewal or extension will be subject to a price increase not exceeding 3% per year (or tied to the Consumer Price Index, whichever is lower), applied to the prior term’s prices. Vendor warrants that any renewal will include the same discount level off list pricing as the initial term.”

These examples aren’t one-size-fits-all, but they illustrate how to translate concerns into concrete language. Giving your legal team a starting point can speed up negotiations and ensure critical protections don’t get lost in wording.

Pro Tip: “Your legal team needs examples, not theories — show them what good looks like.”

Related articles

• Top 5 Dangerous Broadcom Contract Clauses (Explained)
• Broadcom Renewal Price Caps and Price Protections
• Negotiating Broadcom Audit & Compliance Terms
• Termination & Exit Clauses to Demand in Broadcom VMware Contracts
• Building a “Protection Addendum” to Broadcom Contracts

5 Rules for Defending Your Broadcom Contract

1. Never accept undefined pricing terms – always demand caps or fixed rates to prevent future sticker shock.
2. Limit audit scope, frequency, and notice – don’t let “open season” audit clauses undermine your position.
3. Negotiate mutual termination and indemnity rights – you need escape routes and shared risk, not one-sided obligations.
4. Secure transfer rights for corporate changes – your licenses should travel with your business during M&A or restructuring.
5. Make renewals a conscious choice – remove auto-renewal and require advance quotes so you’re in control of continuing or exiting.

Pro Tip: “A good discount lasts three years; a bad clause lasts forever.”

Read about our Broadcom Audit Defense Services.

Do you want to know more about our Broadcom Advisory Services?

Please enable JavaScript in your browser to complete this form.

Name *

First

Last

Email *

Company

Message *

Submit