Commission Agreement Template

We’ve worked with legal experts and proofreaders to create a commission agreement form that you can use time and time again as you scale up your salesforce.

Free Downloadable Commission Agreement Template

We’ve worked with legal experts and proofreaders to create a commission agreement form that you can use time and time again as you scale up your salesforce.
What’s in this template?
  • • Geography/non-compete terms
  • • Commission earnings and structures
  • • Termination clauses
Click below to get a copy of our commission agreement template

What is a commission agreement?

Commission is a type of variable remuneration based on the level of performance from an individual or business. It’s where a company (principal) will reward a salesperson (agent) with a commission fee based on the amount of revenue they generate.
For example, a sales agent may make a 10% commission of the total revenue they generate beyond the first $1000 in one calendar month.
Commission structures are commonly found in sales fields, including real estate, financial services, mortgage brokerage, and consumer goods.
A commission agreement is a formal contract between an agent and a principal to capture the terms and conditions of revenue share to suit all parties involved.

Download our free Commission Agreement Templates

Having a solid commission agreement template will help you get away from doing tedious paperwork, and spend more time developing a successful sales team.

Your commission contract is also a powerful business document that challenges you to get clear on the most beneficial commission structure for agents and your company.

Click below to access a copy of our commission agreement sample

Why is a commission agreement important?

One of the most challenging parts of growing a successful sales team is developing a culture of high performance and loyalty.
How do you help you keep your average performers engaged in making more sales? And how do you keep your best performers from leaving your company to join a competitor or starting their own agency? It’s quite a dilemma for principals around the world.
The first step to safeguarding your practice is to nail your commission contract with prospective sales talents.
Having an airtight sales commission agreement keeps all parties honest to the commitments they’ve made to each other, thus mitigating the risk of stealing clients, under-the-table deals, and lack of motivation.

When should you use a sales commission contract?

Depending on the size and turnover of your sales team, your commission agreement template may be one of your most-used formal documents.
You want to ensure you’re using a commission agreement when you bring on a new sales representative, promote an associate to a sales agent, or in any situation where you may pay a stakeholder in the form of a revenue share.
Put it this way, if you work out some commission split in any of your business-related dealings, be sure to pull out your commission agreement, so you’re covered, and everything is above board.

Download our free Commission Agreement Template

Having a solid commission agreement template will help you get away from doing tedious paperwork, and spend more time developing a successful sales team.
Your commission contract is also a powerful business document that challenges you to get clear on the most beneficial commission structure for agents and your company.
Click below to access a copy of our commission agreement sample

Best practices when using a commission sales agreement

You need to be incredibly intentional in integrating commission agreements into your business successfully. Below are some best practices we’ve identified when using commission contracts.

1. Get face to face with new agents

When presenting commission agreements, it’s always best to do it face-to-face, whether it’s in person or virtually. Connecting with agents on this level is essential to ensure they’re comfortable with the terms laid out in your agreement.
It also allows you to develop a professional relationship where there are clear boundaries for how your company operates. Without this meeting, prospective agents may sign your agreement without doing their due diligence, causing confusion, and sometimes conflict down the line.
So do the work of getting face-to-face and take it a step further to get the agents’ consent for each term, so there is no confusion with expectations as you move forward in your relationship.

2. Be specific in your commission structure

The most important part of your commission agreement is your commission rate. How you determine your revenue share with agents is entirely based on how you want to run your business.
However, the more specific you can be in your fee structure, the clearer your agreement. Agents and principals alike can start to plan around a commission rate motivating all parties to grow the business.
Vague or overly complicated commission structures often create confusion and thus are not as motivating for agents.

3. Be transparent

When presenting your commission contract to potential agents, take the time to explain why you’ve structured the agreement the way you have.
For example, if you have a restriction on what geographical areas an agent can make sales, explain why that’s important. Be open about how your business makes revenue and how it’s able to sustain itself.
Being transparent upfront will help you to build trust with the best talent quickly and also help you to get valuable feedback and develop the most optimum terms over time.
Frequently Asked Questions

FAQ about our Commission Agreement Template

A good commission agreement can help protect a salesperson by holding principals accountable to clear and specific remuneration structures. This ensures that if the salesperson fulfills their role, they will be rewarded accordingly.
A commission letter is a formal correspondence used for principals to offer commission-based employment opportunities to prospective agents.
While not necessary, It’s considered best practice to send a commission letter with your commission agreement for agents to review and sign.
Like any employment agreement, a commission contract may be terminated when:
  1. Any party breaches the conditions of the agreement
  2. Any party gives written notice to another party based on the agreed notice period
Yes, you can. We recognize that some sales commission agreements need to be structured differently based on the situation, so that’s why our template is in Word format so you can make changes as you see fit.
Just keep in mind that if you make any drastic changes, it might be worth getting a lawyer to review it.
document preview

Commission Agreement

Commission Agreement

Parties

– This Commission Agreement (hereinafter referred to as the “Agreement”) is entered into on ______________ (the “Effective Date”), by and between __________________________, with an address of ______________ (hereinafter referred to as the “Principal”) and ______________ with an address of ______________ (hereinafter referred to as the “Agent”) (collectively referred to as the “Parties”).
– Whereas, the Agent agrees not to pursue the selling of a competing product for any competitor during the term of this Agreement.

Agreement

– The Parties hereby agree that the Principal authorizes the Agent to sell ________________________________________________________________________________________________________________________ on behalf of the Principal and the Agent agrees to indemnify himself/herself as the authorized agent of the Principal for such sale.

The Sale

– The Parties agree that the prices of the product will be set by the Principal, that the Principal will obtain and provide the promotional materials (if any) for the Agent to use and to obtain sales, and the Principal will provide a Sales Agreement to the Agent for the Agent to use in the sale of the product.

Term

– This Agreement shall be effective on the date of signing this Agreement (hereinafter referred to as the “Effective Date”) and will end on _____________________.
– The term of this Agreement may be extended upon the provision of written consent from both Parties.

Geography

– The Parties agree that the Agent will sell the product in the following geographical area/ territory _____________________________________ and will not sell the product anywhere else.

Commission Earnings

– The Parties hereby agree that the Agent will be paid by the Principal by the following means ____________________________________________________________________________________________________________________________________________________________________________________

Relationship Of The Parties

– Hereby, the Parties agree that this is a non-exclusive agreement and that the Parties are regarded as independent contractors.

Confidentiality

– All terms and conditions of this Agreement and any materials provided during the term of the Agreement must be kept confidential, unless the disclosure is required pursuant to process of law.
– Disclosing or using this information for any purpose beyond the scope of this Agreement, or beyond the exceptions set forth above, is expressly forbidden without the prior consent of the Client.
– This section will remain in full force even after the termination of this Agreement for a period of ______________________.

Termination

– This Agreement may be terminated in the event that any of the following occurs:
1. Immediately, in the event that one of the Parties breaches this Agreement.
2. At any given time by providing written notice to the other party ______________ days prior to terminating the Agreement.
3. Upon terminating this Agreement, the Agent will be required to return all the Principal’s products and/or any other content (if any) at his/her earliest convenience, but not beyond ______________ days.

Representation and warranties

– The Parties agree and disclose that they are fully authorized to enter this Agreement. The performances and obligations of both Parties may not violate the rights of any third party or violate any other agreement made between them and/or any other organization, person, business or law/governmental regulation.

Severability

– In the event that any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, then the remaining provisions will remain in force in accordance with the Parties’ intention.

Governing Law

– This Agreement shall be governed by and construed in accordance with the laws of ______________.

Alternative Dispute Resolution

– Any dispute or difference whatsoever arising out of, or in connection with, this Agreement shall be submitted to arbitration/mediation/negotiation (circle one) in accordance with, and subject to the laws of ______________.

Amendments

– The Parties agree that any amendments made to this Agreement must be in writing, where they must be signed by both Parties to this Agreement.
– As such, any amendments made by the Parties will be applied to this Agreement.

Assignment

– The Parties hereby agree not to assign any of the responsibilities in this Agreement to a third party, unless such is consented to by both Parties in writing.

Entire Agreement

– This Agreement contains the entire agreement and understanding among the Parties hereto with respect to the subject matter hereof, and supersedes all prior agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.

Signature And Date

– The Parties hereby agree to the terms and conditions set forth in this Agreement and such is demonstrated by their signatures below:
Principal
Name: ______________________
Signature: ___________________
Date: _______________________
Agent
Name: ______________________
Signature: ___________________
Date: _______________________

Download our free Commission Agreement Template

Having a solid commission agreement template will help you get away from doing tedious paperwork, and spend more time developing a successful sales team.
Your commission contract is also a powerful business document that challenges you to get clear on the most beneficial commission structure for agents and your company.
Click below to access a copy of our commission agreement sample
Download Commission Agreement Doc
Download Commission Agreement PDF