Top 5 Dangerous Broadcom Contract Clauses
At first glance, Broadcom’s VMware enterprise contracts might appear routine. However, hidden in the fine print are vendor-favorable clauses that can quietly strip away your negotiating power, send your renewal costs soaring, or lock you into paying for products you don’t actually need.
For CIOs, in-house counsel, and procurement teams, spotting these VMware contract risks upfront is critical. A deal that looks good on paper can turn into a costly trap if these hidden Broadcom licensing pitfalls go unchecked.
For a large enterprise, even one unfriendly clause can translate into millions of dollars in surprise costs over the life of the contract.
This guide breaks down the top five most dangerous clauses in Broadcom’s VMware agreements—and shows how to neutralize each one before you sign.
Pro Tip: It’s usually not the upfront price that hurts you – it’s the contract clauses lurking behind that price.
For a bigger picture, read our comprehensive guide, Broadcom Enterprise Licensing – Contract Clauses to Defend.
Clause #1 – The Audit Clause (Unlimited Access, Minimal Notice)
Why It’s Dangerous: Broadcom’s audit terms often give them sweeping rights to inspect your VMware environment, data, and even affiliate systems on very short notice (sometimes as little as 10–15 days).
There’s typically no limit on how often audits can occur or how much data Broadcom can access. In other words, Broadcom could initiate audits whenever it pleases – even multiple times per year – if it wanted to.
In practice, these broad rights let Broadcom trigger surprise compliance audits whenever it wants. That opens the door to hefty backdated licensing fees and creates intense pressure – usually timed right around your renewal.
How to Fix It:
- Limit audit frequency to no more than once every 24 months.
- Require at least 30–45 days of advance written notice before any audit.
- Define a narrow audit scope (only specific licensed products and relevant customer entities).
- Add confidentiality protections and insist that an independent third party conduct any audit.
Pro Tip: A broad audit clause invites a brutal audit.
Clause #2 – Unlimited Liability for Compliance or Back Fees
Why It’s Dangerous: Some Broadcom/VMware contracts eliminate any cap on your financial liability for license compliance issues. That means if an audit finds you under-licensed or non-compliant, there’s no upper limit to the back fees or penalties Broadcom can demand – your exposure is technically unlimited.
Even a minor misunderstanding of what counts as “usage” could trigger a multi-million dollar bill. Unlimited liability also opens the door for Broadcom to impose retroactive charges or force expensive “true-up” purchases at its discretion. Without a liability cap, you’re essentially handing Broadcom a blank check in any compliance dispute.
How to Fix It:
- Insert a clear monetary cap on compliance penalties (for example, limit liability to the value of the contract or the last 12 months of fees).
- Require Broadcom to prove a material breach before any penalties apply.
- Explicitly exclude any indirect or consequential damages related to license compliance.
- If a shortfall is discovered, negotiate a right to remedy it by purchasing the necessary licenses at standard rates (instead of paying punitive back-charges).
Pro Tip: Without a liability cap, your compliance exposure is infinite – and so is Broadcom’s leverage.
Clause #3 – No Price Cap on Renewal
Why It’s Dangerous:
Broadcom’s subscription agreements often include renewal terms that tie your future costs to the “then-current” list price. In plain English, that means Broadcom can jack up your price by 20%, 50%, or more at renewal time – and you’d have little choice but to pay or lose the software.
With no cap on renewal rates, you have zero price protection or predictability. Broadcom holds all the cards, turning your IT budget planning into a gamble on what they’ll charge you next. In fact, many customers have already seen steep increases at renewal under Broadcom – some report their new price doubled or even tripled compared to the previous term.
How to Fix It:
- Add a cap on renewal price increases (for example, tie hikes to CPI inflation or a maximum of 3–5% annually).
- For multi-year deals, negotiate and fix the renewal pricing upfront in the contract.
- Require Broadcom to provide a written renewal quote well in advance (at least 90 days before term end) so you have time to plan and negotiate.
Pro Tip: If you don’t cap renewal prices, you’re not budgeting – you’re gambling.
Read more about caps, Broadcom Renewal Price Caps, and Price Protections.
Clause #4 – Binding Arbitration in a Vendor-Friendly Venue
Why It’s Dangerous: Broadcom often mandates that any contract disputes go to binding arbitration, usually under rules or in a jurisdiction that favors the vendor (for example, requiring California law and venue).
This means you waive your right to take Broadcom to court, no matter how severe the issue. A one-sided arbitration clause stacks the deck in Broadcom’s favor: arbitration can be costly and private, and with Broadcom choosing the venue or arbitral body, you could be fighting on their home turf. Worse, arbitration decisions are hard to appeal, so if the process goes against you, you’re largely stuck with the result.
How to Fix It:
- Negotiate the dispute clause to use a neutral jurisdiction or mutually agreed arbitration venue (not just Broadcom’s choice).
- Ensure any arbitration is truly mutual – for instance, both parties must agree on the arbitrator or arbitration organization.
- Whenever possible, carve out critical issues (like intellectual property or data security disputes) that can still go to court despite the arbitration clause.
Pro Tip: If a contract limits your day in court, it limits your leverage in the dispute.
Clause #5 – Bundling and Product Commitment Requirements
Why It’s Dangerous: Broadcom frequently uses bundling commitments that require customers to buy an entire suite of VMware products. For example, you might be forced to purchase the full VMware Cloud Foundation bundle just to get a single component like NSX – instead of being allowed to buy it on its own.
This kind of clause means you end up paying for a lot of features you don’t need or use. It also prevents you from mixing and matching solutions – you can’t replace one component with a competitor’s product if you’re locked into paying for the whole Broadcom bundle.
In short, bundling hides the real cost of each product and increases lock-in to Broadcom’s ecosystem.
How to Fix It:
- Insist on modular licensing: you should be free to buy only the specific VMware products or components your business needs.
- Remove or strike any “must-buy” language that requires purchasing a minimum suite or broad platform.
- Demand transparent, itemized pricing for each product, so you can see the cost of individual components and avoid paying for unwanted extras.
Pro Tip: Bundled deals hide the true cost – and they kill your ability to walk away to another vendor.
Dangerous Clauses and Fixes at a Glance
| Clause | Why It’s Dangerous | Recommended Fix |
|---|---|---|
| Audit Rights | Unlimited access, vague scope | Limit frequency, scope, and require notice |
| Unlimited Liability | No cap on compliance fees | Cap exposure to contract value or 12mo fees |
| No Price Cap | Renewals at list pricing | Add CPI tie-in or 5% annual increase cap |
| Binding Arbitration | Vendor-favored jurisdiction | Use neutral venue and mutual arbitration |
| Bundling Requirement | Forced suite purchase, hidden cost | Make bundles optional; allow modular buys |
Pro Tip: Each risky clause you ignore now is leverage Broadcom will use against you later.
Checklist – Your 5-Point Clause Defense Plan
✅ Audit rights – Limited frequency (max once every 2 years), narrow scope, and 30+ days notice.
✅ Liability – Capped for any compliance true-ups (no unlimited exposure).
✅ Renewal pricing – Increases capped or fixed ahead of time in the contract.
✅ Dispute venue – Arbitration/jurisdiction terms made neutral and fair to both sides.
✅ Bundling – No forced suites; you can pick and pay for only what you actually need.
Pro Tip: Smart defense isn’t about saying “no” to everything – it’s about demanding precision and fairness in every term.
5 Rules for Spotting Risky Broadcom Clauses
1️⃣ Watch for trigger words: Phrases like “unlimited,” “list price,” or “then-current” are red flags that a clause could lead to open-ended costs or vendor-controlled changes.
2️⃣ Always cap your exposure: If a clause involves any fee, penalty, or usage count, make sure there’s a clear monetary cap or limit to your obligation.
3️⃣ Neutralize dispute terms: Never accept a one-sided arbitration or jurisdiction clause. Insist on neutral ground and balanced rules for resolving any serious disagreements.
4️⃣ Reject all-or-nothing bundles: Don’t let the contract force you into “suite-only” or “platform-wide” commitments. You should have the freedom to purchase only the components you actually need.
5️⃣ Rewrite vendor-favored renewals: Assume every renewal provision is written in Broadcom’s favor. Proactively tighten or redefine these clauses now so you’re protected when it’s time to renew.
Pro Tip: Good negotiators fight for a better price; great negotiators fight for better clauses.
Read about our Broadcom Audit Defense Services.
