Free Referral Fee Agreement Templates | Word – PDF

This Referral Fee Agreement is utilized where a supplier of goods or services (the “client”) wishes to engage an intermediary called a “referral partner” or finder. The finder identifies potential customers to the client in return for a commission. Thus the client increases his sales and expands his customer base.

A referral partner does not do any selling of the client’s products or services. Moreover, the finder does not forward orders from the customer to the client.

Finder’s duties do not include accepting any orders on behalf of the client or supplying any goods or services. Instead, his job is to discover potential customers by apprising them of the goods or services offered by the client and turning them into leads. He actively passes customer details and other relevant information to the client.

Besides the customer introduction, the referral partner has no additional role in the relationship between the client and the customer.

Following are some alternate names for a referral fee agreement

  1. Introduction fee
  2. Reference type
  3. Business referral agreement
  4. Client referral agreement
  5. Commission referral agreement
  6. Finder’s fee agreement
  7. Marketing referral agreement
  8. Partnership referral agreement

When is Referral Fee Agreement Used

All businesses are in search of revenues to generate more profit. However, the only way to increase revenues is to have a constant flow of new customers or clients. To ensure this, the business adapts a referral commission growth strategy. The best way to do this is to build a network of people who introduce your product or services to others in return for a monetary gain referred to as referral fee or commission.

Businesses are inclined towards referral fee agreements because referral partners use a face-to-face marketing strategy that is more convincing. The finder called referral partner has experience and connection, which most of the business entities lack. People trust recommendations from their peers than other types of advertising.  

Referral Fee Agreement Templates – by type


Attorney_

Attorney

It is usual for attorneys to refer business to other lawyers, and the referring attorney may get a lawyer referral fee in return. How attorney lawyer referral fees are prepared can be complicated but must always fall within the rules governing lawyers.

Example: An inexperienced attorney doesn't have the ability to take on a new case because she doesn't have enough legal knowledge. She chooses to refer the case to a more experienced law firm. If an attorney referral agreement exists between her and the law firm, the law firm will disburse an attorney referral fee to the referring attorney.

Download: Microsoft Word (.docx)


Construction_

Construction

Construction involves huge projects. The construction client requires many contractors and sub-contractors for the continuity of the project. There is a referral agent who has contacts with contractors in different fields of the construction business.

Many other sectors are linked with the business of Construction. These referral agents have links with steel, machinery, labor supply, and many others. A  referral fee agreement is made between a contractor or subcontractors in return for a fee.

The fee can be a fixed amount or a percentage of the total cost of the work given to the contractors. The agent gets his fee after the contractor finished the work and receives payment from the client.

Download: Microsoft Word (.docx)


Consultant

Consulting

There are many types of consultant firms operating in finance, IT, Chartered accountancy, human resource, and many others. A consulting referral agreement is between the consultant firm and the referring agent against an agreed fee.

The agent is paid after the consultant firm has delivered the services. The referral fee is usually a percentage of the total amount of consulting services. However, the fee can also be a fixed amount per client referred, depending on the arrangement.

Download: Microsoft Word (.docx)


Financial-Advisor

Financial advisor

There are many kinds of advisory services available in the financial sector. For example, auditors, stockbrokers, financial planners, investment advisors, debt counselors, etc. These advisory companies need clients for the growth of the business. A financial advisor referral agreement is between an advisory company and the referring agent.

The referring agent agrees to bring the client and leads against an amount of fee. The fee is mostly a fixed amount, and the advisor may also pay after a certain number of clients have been dealt with, depending on the agreement. Payment can also be a tiered system with a higher amount paid as the volume of referrals increases.

Download: Microsoft Word (.docx)


Insurance

Insurance

There are many types of insurance policies and coverage that many people need. For example, health insurance, car insurance, Homeowners or Renters Insurance, life insurance, and many more. Insurance is the business of risk management, and people want to safeguard their future.

Insurance referral agents are almost in every sector of the economy. Moreover, insurance referral agents are in the books of almost all insurance companies. With the advent of the internet, insurance referral is done through online marketing.

The referring agent provides leads, and when the lead is converted into policyholder, the agent is paid. The standard agreement is that the referred leads visit the company website and get registered, and within 30 days after registration, the agent will collect his fee.

Download: Microsoft Word (.docx)


Loan

Loan

Banks and other lending companies make a profit by giving loans to people at a specific interest rate. A loan referral agreement is between an affiliate who brings a potential loan seeker and the loan-giving company against a sum of agreed commission. Loans can be car loans, personal loans, and credit cards.

 

The referral agent can bring all loan applicants except residential mortgages due to the RESPA act. The referrer only provides the name and phone nuber of the person seeking the loan and is prohibited from negotiating the terms and conditions of the loan.

Download: Microsoft Word (.docx)


Lead

Leads generation (only)

A lead generation agreement is between a company and a lead finder who attracts customers via email, telephone, or other relevant marketing data. Lead generation is a process through which the lead finder gives product/service information to prospects through nurturing with the final goal to convert them into customers.

Ways to produce leads are through emails, blog posts, content live events, and many more. Leads are sold to the company on a per lead basis, and it depends on the company whether they can convert the lead into sales. For example, lead is through direct traffic in online marketing when people sign up via emails and convert in customers.

Download: Microsoft Word (.docx)


free real estate referral fee agreement template

Estate (realtor)

A real estate referral agreement is between a real estate broker and the real estate referring agent. The referring agent earns a commission for the referral. The real estate broker must have a license to operate in the state.

There are situations when the customer is asking for service in another state that the broker cannot provide. In such a situation, the broker refers the client to a real estate broker in the state where the client wants to buy/sell the property and earns a commission for the referral.

Download: Microsoft Word (.docx)

    Importance of Referral Fee Agreements

    Companies enter into referral fee agreements for a variety of reasons. The company may be searching for financing partners or customers. Both the company and the referral partner benefit from the agreement. The agreement should not be based on verbal consent or a simple handshake promise.

    Such consensus and promises are loose arrangements in which many issues are compromised. For example, many times, commission payments are deferred. Also, there is no transparent process to pursue leads exactly. The arrangement between a company and a referral partner should be documented, and here lies the importance of a referral fee agreement.

    There are many key terms a company should consider in negotiating and documenting the finder agreement. When everything is well documented, straightforward with no ambiguities, all the transaction runs smoothly.

    Online Referral and Affiliate Programs

    Online marketing is a way of exploiting web-based platforms to spread a company’s brand, products, or services to its potential customers. Digital marketing has many forms, and the two widespread programs are referral and affiliate programs.

    A referral program offers current customers and users an incentive whenever someone they refer makes an online purchase.  The incentives are usually a one-time discount, gift card, or service upgrade. The key partaker of a referral program is the customer (or referrer).

    In an affiliate program, key players are the actual marketers, bloggers, influencers called the affiliates. They are compensated for any new customers they bring in. The affiliate is not a customer but has an audience that includes the company’s target market.

    Affiliate program compensations are cash-based. For example, incentives like a one-time payout for each sale, a percentage of the first sale, or a recurring percentage on a monthly subscription.

    Affiliate Agreement

    An affiliate agreement is a document through which two parties, the company, and the affiliate, form a relationship. The affiliate gets funds for certain qualified actions. Online affiliate agreements are of two types.

    Affiliate agreements where the affiliate gets funds for user clicks over the company’s website or affiliate agreements by which the affiliate receives funds for user purchases for the company’s goods or services.

    Affiliate agreements are very popular, as many individuals who work online can make significant income from affiliate relationships. In addition, many users on prominent social media platforms deal with companies to endorse products or services. When the company gets clicks or purchases from the affiliate’s personalized links, the affiliate gets an amount or a percentage of the sale or an amount per click.

    In affiliate agreements, the affiliate usually doesn’t have a say in the specific terms. Instead, the affiliate signs up for the company’s program, and there is no negotiating over the agreement. The agreements are not paper signed, they are posted on the company’s website, and the affiliate read and agree to them before signing up for the affiliate program.

    The company may ask the affiliate to fill out an IRS form W-4 form to inform the company how much tax to withhold from their paycheck based on filing status. The W-4 form is a fundamental tax return filled out by employees. Mainly, it tells employers the correct sum of the tax to withhold from the employee’s income.

    Using the Affiliate Agreement Document

    The affiliate agreement document is used by a company looking to build an inclusive agreement for new affiliates. Filling out this template just one time and posting it on the company website is enough. The agreement is inclined towards the company as it has to ensure that all of its needs are covered.

    In the document, the form filler can enter relevant identifying details of the company, like their name and website. In addition, particulars of the affiliate relationship are put in, such as the type of affiliate program it is and the specific payment terms.

    There are general contract requirements like the state location for any disputes and other general terms. When the agreement is filled out, it is posted on the company website as a complete document.

    Components of the Referral Fee Agreement

    A referral fee agreement is a formal document containing several different essential components.

    When drafting the agreement, the following points must adhere:

    Parties

    The parties concerned are the referrer and the seller of the product or services. When drafting the agreement, the effective date, name, and address of the referrer and the seller should be mentioned. The exact business of the seller should also be written on the agreement. The name of the referred client must also be included in the agreement.

    Term

    The terms are the exact effective date of the agreement and the date on which the agreement will end.

    Termination

    If any party is found to breach the agreement, the agreement will instantly end. If any of the parties want to finish the agreement, that party should give the notice of termination in writing, mentioning the number of days before the termination

    Relationship between parties

    The referrer is the agreement that acts as an intermediary and is an independent contractor /service provider. The referrer under no circumstance will be considered an employee. Under the agreement, there exists no partnership between the concerned parties.

    Payment and fees

    The concerned parties have understood that the referrer will receive payment amount/ commission per referral. In addition, all concerned parties agree that the referrer will invoice the seller every specific day/month for the referral services they conclude.

    Confidentiality

    All terms and conditions of this agreement and any resources provided during the term of the agreement should be kept confidential by the referring party unless disclosure is required according to the process of law.

    The referring party will not be allowed to use any information provided to them after the ending of the agreement for some years. Disclosing or using this information for any purpose outside the extent of this agreement or beyond the exceptions described in the agreement is explicitly prohibited without the prior permission of the seller. And will remain in effect irrespective of the fact in case the agreement is finished.

    Without the seller’s written approval, the referrer will not use the seller’s information for advertisements or any other promotional activity. In addition, the referrer will not use any trade secrets given to them by the seller without the seller’s written approval.

    Limitation of liability

    Under no circumstances will any party be accountable for any indirect, special, consequential, or punitive damages (including lost profits) resulting from out of or pertaining to this agreement or the transactions it anticipates (whether for breach of contract, tort, negligence, or another form of action) in case such is not connected to the direct outcome of one party’s neglect or breach.

    Indemnity

    The parties reach an agreement not to indemnify and hold one another harmless. This also pertains to their affiliates, agents, officers, employees, and/or successors. The parties to this agreement herewith furthermore agree to assign against all (if any) claims, liabilities, damages, losses, penalties, punitive damages, expenses, any realistic legal fees, and/or costs of any nature or any amount that may occur.

    This contains, but is not limited to, any amount that may result from the neglect of or the violation of this agreement by the party indemnified its successors and assigns that occur in terms of this agreement.

    Dispute resolution

    Any dispute or difference of any kind as a result of or in connection with this agreement will be presented to  arbitration/mediation/negotiation) according to, and subject to the laws of the state.

    Governing law

    This agreement will be governed by and interpreted in accordance with the laws of the state.

    Severability

    Suppose any conditions of this agreement are found to be null and void and revoked by a court of competent jurisdiction. In that case, the outstanding provisions will remain to be imposed in accordance with the parties’ intention.

    Entire agreement

    This agreement covers the entire agreement and arrangement among the parties concerning the subject matter hereof, and replaces all prior agreements, arrangements, incentives, and conditions, stated or suggested, oral or written, of any kind concerning the subject matter hereof. In addition, the stated terms thus far control and replace any course of performance and/or usage of the trade conflicting with any of the terms hereof.

    Amendments

    The parties concur that any changes made to this agreement must be in writing, and both parties must sign them to this agreement. As such, any amendments drafted by the parties will be attached to this agreement.

    Signature and date

    The parties thus agree to the terms and conditions laid down in this agreement, and such is confirmed through their signatures on each page of the agreement.  Both the parties to the agreement must provide photo identification like social security card or driving license for verification. In addition, the signature should confirm the effective date of the agreement.

    Standard Templates

    Following are some free downloadable templates for you:

    referral fee agreement sample

    mutual referral agreement template

      Best Practices When Using a Referral Fee Agreement

      When doing business, one should have a vision. Expansion and growth are very important. Therefore, the agreement should be carefully made, keeping all the clauses to safeguard the company’s interest and at the same time giving due rights to the referral partner.

      Following are some of the practices for a good business:

      Use authentic platforms for online affiliate referrals

      Affiliate marketing is a popular approach to drive sales and generates substantial online revenue. Very favorable to both brands and affiliate marketers. The important thing is that the platform used must be authentic. Above all, authentic affiliate platforms give you access to tens of thousands of merchants and millions of products.

      Be specific when framing the commission structure

      Commission rate is the most crucial part of the referral partner agreement. The company’s revenue depends on what the business can afford to give up on sale. Therefore, the company should clearly define the rate structure and no ambiguities in the referral’s mind.

      The most common compensation structure in a finder agreement is the percent of gross proceed paid in cash. The percentage can increase or decrease depending on the proceeds upon the completion of the transaction. The important aspect is the structure of the reward. This way, both the company and the finder are aware of their income. 

      Transparency

      Transparency helps you ensure that both the company and referral partner expectations are appropriately set and fulfilled. When preparing the referral agreement, always discuss it with the referral partner. For example, the finder should know why he is not an employee of the company. In addition, there are confidentiality clauses about what information is to be shared with the customer.

      The referral partner should have a say in the agreement. Explain how the business is generating revenues and what part the referral partner is going to play. Transparency is the basis for trust between the company and its customers, and partners

      Pay commissions on time

      The finder commission is paid only when the transaction between the customer and the company is executed. Sometimes the payment is deferring, or multiple transaction fees are delayed. This creates mistrust between the finder and the company. Therefore, the company should ensure that all payments to the finder are made on time as promised.

      Frequently Asked Questions

      What is the difference between a referral and a reseller?

      The difference is that a “reseller” is a company or individual buying goods or services to resell them instead of consuming them, and a “referral” recommends products or services to other customers.
      The reseller sells on his website, gets his commission at the time of sale, and decides the price of the products. Whereas the referral sale is done on the company’s website, and the commission is paid when the sale transaction is executed, the company does the pricing.

      Could referral agreements be exclusive?

      An exclusive agreement may restrict future business opportunities. For a company, more referral partner means more customers. Similarly, the finder wants to work with other companies to increase his commission. Referral arrangements are seldom exclusive only when the product or services have a unique feature or audience.

      Is referral agreement legally binding?

      A verbal agreement is not a legally binding contract. So, it is always best to draft the terms of an agreement in writing, even if referral agreements are not obligatory by law to be in writing to be legally implemented.
      An agreement in writing confirms that all parties to the agreement have the same wise of terms. In addition, if a disagreement regarding the terms of the agreement arises, a documented agreement may serve as a valuable piece of evidence.

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