Referral Agreement Template

We’ve worked closely with legal experts and proofreaders to draw up a simple referral agreement template that you can use time and time again as you scale your sales.

Referral Agreement (Free Downloadable Template)

We’ve worked closely with legal experts and proofreaders to draw up a simple referral agreement template that you can use time and time again as you scale your sales.
What’s in this template?
  • • Nature of business relationships
  • • Termination clause
  • • Payment and fees
Click below to download our free referral agreement

What is a referral agreement?

Referral marketing is a type of joint venture where a product or service seller will pay a commission to a third-party for every sale they make. The third-party in this context is known as the referrer.
For example, a financial advisor (the seller) pays a 5% commission fee to a mortgage broker (the referrer) for every client they successfully refer to.
This is a powerful sales strategy as third parties are incentivized to refer leads in exchange for fees, and the seller generates more top-line revenue by giving up a percentage of their sales.
A referral agreement is a formal contract between a seller and a referrer to capture the terms and conditions of how referral sales are measured, paid, and coordinated.

Grab a copy of our Referral Agreement Template

Establishing a referral agreement will help you save time so you can focus on building valuable business relationships.
Your referral contract is also a powerful document that challenges you to get clear on your marketing channels so you can scale your growth.
Click below to access our referral agreement sample

Why is a referral agreement important?

Joint venture marketing is an old-school strategy that’s been around in what seems like forever. The problem is, most of these deals are made under the table or through handshake promises.
The challenge with these loose arrangements is that commission payments can get missed, or there’s no transparent process to track leads accurately—often resulting in disputes.
A referral contract keeps everything above board and is a point of reference to hold all parties accountable to what they initially agreed.
The agreement brings order and fairness to the joint venture relationship, limiting escalations along the way

When should you use a referral fee agreement?

Your agreement may be one of your most-used business documents, depending on how much you focus on referral commissions as a growth strategy.
You want to ensure you’re using a referral partnership agreement when a third-party expresses interest in your joint venture. This could be in-person, remotely, or even if you have a completely automated online affiliate program. In any of these cases, you’ll need to introduce your contract to get consent from potential referrers.

Grab a copy of our Referral Agreement Template

Establishing a referral agreement will help you save time so you can focus on building valuable business relationships.
Your referral contract is also a powerful document that challenges you to get clear on your marketing channels so you can scale your growth.
Click below to access our referral agreement sample

Best practices when using a referral commission agreement

You need to be methodical when integrating referral agreements into your business. Below are some best practices we’ve identified when optimizing your referral contracts.

1. Get face-to-face with new referral partners

If possible, when presenting your referral agreements, it’s always best to do it face-to-face. This could mean in-person or virtually–it doesn’t matter. Connecting with partners on this personal level is essential as it helps to build relationships, explain how your product/service works, and get comfortable with your contract terms.
So do the work meeting with your potential partners and get their approval for everything in your agreement. By doing this, you’ll help manage expectations and limit any confusion moving forward in your business relationship. As a bonus, connecting with partners also keeps your brand front of mind, which will ultimately help with generating more sales.

2. Be specific with your commission structure

The most important part of your referral partner agreement is your commission rate. How you determine your revenue share is entirely based on how you want to run your business and what you can afford to give up per sale.
However, the more precise you can be in your fee structure, the clearer your agreement. Sellers and referrers alike can start to forecast revenue around a referral fee motivating all parties to drive sales.
Overly complicated commission structures often create confusion for partners and thus are not as motivating for them. So it helps to keep your fee structure straightforward with a flat fee or fixed percentage for each referral.

3. Be transparent

When presenting your referral agreement to potential partners, take the time to explain why you’ve structured the contract the way you have.
For example, if you have a confidentiality clause about how marketing materials are used and preserved, explain why that’s important.
Be open about how your business makes revenue and what role partners play in sustainability.
Being transparent about your referral contract will help you build trust with partners and help you get valuable feedback about what’s working and what isn’t when it comes to recommending your offerings. You can use this feedback to improve your product/service, commissions structure, and so forth.
Frequently Asked Questions

FAQ about Referral Contracts

A referral contract is not legally binding without written consent from both the seller and the referrer. Signatures are legal proof that all parties acknowledge the terms and conditions of the agreement.
A referral agreement would rarely be exclusive as the very nature of the arrangement is to scale a sales force by working with as many relevant partners as possible. Exclusivity for either partner doesn’t make business sense unless the product or service had very particular features and audience.
While joint ventures and referral marketing are used interchangeably, there are some underlying differences between the two models.
A joint venture working with non-competing businesses with similar customers to help grow each other’s companies. For example, a real estate agent could enter a joint venture with a property stylist where they can generate more leads by supporting each other.
Referral marketing involves working with stakeholders who can refer leads in exchange for a commission regardless of how they get sales. For instance, your very own customers could become referral partners providing that they can send leads through their network.
We recognize you may need to make changes to our template based on the needs of your referrer relationships. We’ve made our agreement available in Word so you can make edits as you see fit.
document preview

Referral Agreement

Referral Agreement

Parties

– This Referral 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 “Referrer”) and ______________ with an address of ______________ (hereinafter referred to as the “Seller”) (collectively referred to as the “Parties”).
– The Seller is in the business of ______________.
– The Referrer has contacts with ______________ and has agreed to act as an intermediary finder of clients for the Seller and his/her services.

Term

– This Agreement shall be effective on the date of signing this Agreement (hereinafter referred to as the “Effective Date”) and will end on ______________.
– Upon the end of the term of the Agreement, this Agreement will not be automatically renewed for a new term.

Termination

– This Agreement may be terminated in case the following occurs:
  1. Immediately in case one of the Parties breaches this Agreement.
  2. At any given time by providing a written notice to the other ______________ days prior to terminating the Agreement.

Relationship Between Parties

– Hereby, the Parties agree that the Referrer in this Agreement is an independent contractor where the Referrer provides the services hereunder and acts as an independent contractor.
– Under no circumstances shall the Referrer be considered an employee.
– Whereas, this Agreement does not create any other partnership between the Parties.

Payment And Fees

– The Parties agree that the Referrer will receive ______________ commission per referral.
– The Parties agree that the Referrer will provide an invoice to the Seller every ______________ days/months for the Services he/she completes.
– The Parties agree that the means of payment will be via ________________________________________________________________________________________________________________________

Confidentiality

– All terms and conditions of this Agreement and any materials provided during the term of the Agreement must be kept confidential by the Referrer, unless the disclosure is required pursuant to process of law.
– The Referrer will not be entitled to use any information provided to him/her even after the conclusion of the Agreement for a period of ______________ years.
– 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 Seller.
– This section will remain in force regardless of the fact in case the Agreement is terminated.
– The Referrer is not to use the Seller’s information for advertisement or any other promotional activity without the Seller’s written consent.
– The Referrer is not to use any intellectual property provided to him/her by the Seller without the written consent of the Seller.

Limitation Of Liability

– Under no circumstances will either party be liable for any indirect, special, consequential, or punitive damages (including lost profits) arising out of or relating to this Agreement or the transactions it contemplates (whether for breach of contract, tort, negligence, or other form of action) in case such is not related to the direct result of one of the party’s negligence or breach.

Indemnity

– The Parties agree not to indemnify and hold one another harmless. This also applies to their affiliates, agents, officers, employees, and/or successors. The Parties in this Agreement hereby in addition agree to assign against all (if any) claims, liabilities, damages, losses, penalties, punitive damages, expenses, any arising reasonable legal fees and/or costs of any kind or any amount that may arise. This includes, but is not limited to, any amount which may result from the negligence of or the breach of this Agreement by the party that is indemnified, its successors and assigns that occurs in terms of this Agreement.
– This section will remain in full force and tact as well as effect even upon the termination of the Agreement naturally or the early termination by either of the Parties.

Dispute Resolution

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

Governing Law

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

Severability

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

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.

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.

Signature And Date

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

Grab a copy of our Referral Agreement Template

Establishing a referral agreement will help you save time so you can focus on building valuable business relationships.
Your referral contract is also a powerful document that challenges you to get clear on your marketing channels so you can scale your growth.
Click below to access our referral agreement sample
Download Referral Agreement Doc
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