Referrals are a quick and easy way of making money. If you are an influencer and looking forward to providing referral services to any company, you need a referral agreement!

The laws and agreements governing the business dealings are often confusing in nature. There are many hidden liabilities and perks that a layman may not understand.

You don’t need to worry though! This article explains in detail the makings of a referral fee agreement, its conditions of application, and its significance as well.

What Is a Referral Fee Agreement?

The reference fee agreement is generally used to regulate the remuneration received when one party refers to any client to the other party. A referral fee agreement can be understood as:

  • The referral fee agreement is between two parties, a company, and an associate.
  • The associate is paid a commission for the services he provides.
  • The agreement is mutually agreed upon and has certain conditions of application as well.

The premise of the agreement is pretty simple. It falls into the mercantile category of the business law.

The company is a primary service provider and is complementing its services by employing an external associate or secondary service provider. The associate of the company refers to potential clients to the company.

The company, in return, pays some amount to the associate for providing this service. The referral fee is basically an amount of compensation or commission that is paid to an associate by a company for referring a client to the company.

The referral agreements with an associate can often span over various services, in addition to the clients, for the primary service provider. For example, the associate can also bring extra supplies, capital, and assets to the company.

When Need a Referral Fee Agreement?

A referral fee agreement, like all the other aspects of a business, is done to increase the reach of the business while ensuring the commission is paid to the referring entity. This is the primary and foremost need for it. You need a referral fee agreement in the following circumstances:

  • Referral increases the reach of the company which can be interpreted in a number of ways. The companies are often looking for endorsement deals and referrals from big names in the market.
  • A referral from a person, who is reliable and likable in the eyes of the general public, will give an advertisement boost to your business. These agreements are common in the sports and clothes industry.
  • An associate of the company which sits at an important junction for the service being provided by the said company can often refer clients to the company. These types of agreements are commonly seen in the medical and technical fields.

At the end of the day, this agreement could even be used to jumpstart the revenue of a company.

What Are the Features of a Referral Fee Agreement?

A referral fee agreement is a legally binding document that makes the interested parties, in a given agreement of business, liable to pay damages if either of them strays from their legally agreed-upon obligations.

In a referral fee agreement, many factors define the dynamics of the said agreement. The most prominent part of these agreements is definitely the seller of the services, the buyer of the services, and the services in themselves.

Moreover, these agreements define much well thought out conditions, under which both parties are obligated to carry out the given agreement.

In simple words, these agreements make the seller of the services liable to sell the services for an agreed-upon compensation, to the customer. Whereby, the customer is made liable to buy these services from the seller by paying the agreed-upon compensation.

There are many intricacies of these agreements. These agreements go into depth to explain the complicated conditions of the situation being discussed. It might be interesting to note that the referral fee agreement might be a referral fee agreement in and of itself as well.

Where Can I get Free Referral Fee Agreement Sample?

You can get your free sample of Referral Fee Agreement from Cocosign. The sample provided on this website is well thought out and includes essential clauses for protecting the interests of both parties.

The referral fee agreements between the two parties are often complemented by the proper acknowledgment for the following conditions:

  • Commission: The associate pays about 25% of the sales volume they contribute, either per sale or over the total sales they bring over a specified time period. However, this rate is highly flexible and can vary a lot, depending upon the package agreed upon, by the parties involved.
  • Referral Eligibility for Payment: The referral fee agreement also focuses on the conditions of payment to the associate. The payment is not usually made on bringing in potential clients, but only when the sale is made to the client.
  • Time of Payment: The date of payment after the sale has been made, amenities given to the associate in the form of service benefits or just general concessions, tools are given to the associate to facilitate the referrals and a lot of other conditions are discussed as well.
  • Duration: It's a formal agreement so its duration, start date, and end date are specified as well. This shows the duration for which the agreement is agreed upon and well both parties are declared benefactors in this agreement.
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The business dealings laws are regulated by the agreements to legally bind certain obligations on the benefactors.

The referral fee agreement is such an agreement that is formed between two parties, the company which sells the services and the associate that refers clients to these services in return for a commission.

In this article, we have explained the purpose and benefits of a referral agreement. You can get a free sample of a referral fee agreement at Cocosign!


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