Before you sign on any affiliates to your program, you need a document for them to sign outlining the details of your program, the terms and conditions, and a detailed description of each party’s responsibilities. This document is none other than your affiliate agreement.
To help you understand the intricacies of the affiliate agreement, we’ll review each section of the contract and why it’s necessary. We also have a free affiliate agreement template you can download and use for your program.
Affiliate agreement template: What is an affiliate marketing agreement?
The affiliate marketing agreement, or just an affiliate agreement, is a contract between your business and your affiliate, enabling your affiliate to advertise your business for compensation.
In a typical affiliate program, the affiliate posts a link on their website or social media channel leading to your business’s website. Then, your business compensates the affiliate for:
- Every purchased item through the affiliate link or affiliate coupon code -or-
- The number of clicks on the link (PPC, pay-per-click)
The contract states the terms and conditions of the agreement, including the nature of the partnership, commissions and payouts, responsibilities, and more. Before writing the terms, you must know:
- Your company’s website conversion rate
- The average number of sales and profit margin
- Affiliate’s website traffic
- Percentage of visitors likely to click on the affiliate link
The agreement aims to ensure both parties understand their roles and responsibilities within the affiliate program.
Anytime you hire a new affiliate to join your program, they should sign an updated affiliate agreement.
Affiliate agreement template: What must you include in the affiliate agreement template?
Affiliate agreement must cover both legal and payment requirements.
As the affiliate agreement is a legally binding contract, this goes without saying. But, your agreement must outline your company’s requirements, intellectual property rights, disclaimer, confidentiality agreement, termination or suspension clause, and more.
Even though affiliates have the freedom to promote using their own social media channels, your relationship is a professional one and must be treated as such. This not only protects your affiliate but protects you against any unethical marketing practices.
The monetary stipulations depend on setting your program up, but generally, every lead or sale generated by an affiliate earns them a commission. Earning a commission is the entire reason your affiliates joined your program, so it’s imperative to outline all payment requirements, including:
- Commission rates
- Payout method
- Payment frequency (per sale or click)
- Commission earning requirements
- Any commission disqualifications
Affiliate Agreement Template: The Parts of an Affiliate Marketing Contract
Your affiliate agreement must outline the responsibilities of both parties, the promotional guidelines, and the commission guidelines.
Here are sections to cover in your affiliate agreement:
- Effective date
- Primary website
- Relationship of the parties
- Start and end date of the agreement
- Assent and Acceptance
- Age restrictions
- Sign-up steps
- How the affiliate program works
- Non-exclusivity clause
- Affiliate and Company responsibilities
- Commission and Payout information
- Link promotion
- Brand promotion
- Confidentiality clause
- Term, Termination, and Suspension
- Legal provisions
- General provisions
State the date the agreement becomes valid and binding.
State your website.
You must define terms like business, company, affiliate, affiliate application, website, affiliate program, and any definition used in the clause to prevent ambiguity in the agreement.
The definitions prevent unintentional ambiguities that can later cause confusion or legal trouble. It also keeps everyone in accord. For example, legalese can be confusing if you’re unfamiliar with specific terms. So clearly define each term using precise language to avoid misunderstandings.
Relationship of the parties
You need to specify the nature of the partnership. The affiliate is an independent contractor and not a direct employee of your company. Define the affiliate’s role because this exempts you from providing your affiliates with lawfully required employee benefits.
Start and end date of the agreement
List the start and end dates of the contract.
Assent and Acceptance
This section reviews the requirements an affiliate must go through to be accepted into your program. Typically, an affiliate program is open to the public with all of the company’s requirements and signup page located on the website. Your program evaluates the applicants, follows up, and then you either accept or reject them.
Every company has its application and acceptance criteria. For example, some affiliate programs require affiliates to have a minimum number of followers or minimum website traffic standard to their site. Other programs may look for external factors like an affiliate’s personality and/or voice.
This section details the age requirements for joining an affiliate program. Typically, programs choose 18 years of age and can legally agree to an affiliate agreement.
This section outlines the sign-up process. The affiliate must formally apply to the program to sign their agreement. Add a line about where to find the affiliate application on your website.
Some affiliate programs say that submitting an affiliate application doesn’t guarantee acceptance into the affiliate program.
How the affiliate program works
This section describes your affiliate program, including what affiliates need to know about it. How will your affiliates receive links for your products? How will they receive their commissions after sales?
Review any requirements affiliates need to meet when posting links, what sales qualify for commissions, and how often you’ll pay out their commissions.
Let’s face it, not every affiliate will solely work for you. And that’s okay! This means that most affiliates aren’t exclusive to your company. Frequently, affiliates publish articles with multiple product reviews, comparisons, and more and include numerous links to several other affiliate programs.
Affiliate marketers earn a salary from commissions, so they need to have the freedom to promote multiple businesses.
Affiliate and Company Responsibilities
In every contract, it’s critical to list the responsibilities of all concerned parties. Ensure your marketing program runs seamlessly by outlining what you and your affiliate must do.
Commission and Payout Information
In this section, write all essential commission aspects: how much your affiliates can earn, how much they can make, and where to expect payment. It also includes cases where purchases aren’t eligible for affiliate commissions and guides how affiliates must market your products.
This section answers these questions:
- What is the commission eligibility for an affiliate?
- How can affiliates earn commissions? Do you pay-per-sale, per click, per lead?
- What are the terms and conditions if a referred customer returns a purchased product?
- List the total commission rates.
- Are the commission rates liable to change at any time? What is the process for new negotiations?
- Is there any bonus offer if and when affiliates meet specific criteria?
- What is the cookie duration?
- How long is an affiliate eligible for a commission after a referred customer clicks on their link?
- Are there any fraudulent actions making for purchase ineligibility?
- What criteria must be met before affiliates receive their payout?
- How are your affiliates going to be paid? Through PayPal? Through a bank account?
These questions help form your commission structure section.
This section reviews all link promotions for affiliates and affiliate programs including,
- What affiliates can and can’t promote in regards to their affiliate links, codes, or coupons
- Where the affiliate link can be displayed
- What counts as link/coupon/code abuse like using adware, cookie-stuffing, not specifying if a link is an affiliate link, intrusive interstitials (pop-ups)
This section outlines how an affiliate can view their performance in real-time, such as payout reports, purchase information, and qualified clicks
This part covers brand promotions within the affiliate relationship like,
- The rules affiliate must follow when marketing your brand and using your name.
- The messaging guidelines for your product
- The acceptable advertising types and restrictions on the use of marketing material
- Intellectual property requirements: what brand logos, mottos, domain names, and product names belong to your brand?
- Proprietary rights or restrictions to using your intellectual property and the consequences of the unauthorized use.
This section lays out any technology used to track your affiliate’s activity, including the software or third-party networks, tracking cookies, and any other tracking information.
Detail your company’s tracking process and how it monitors your affiliate’s activity, performance, and commissions.
Your company may need to share personal information unavailable to the public with your affiliate program. This includes customer lists, supplier information, future product launches. Determine what business, financial, or customer information is proprietary.
In addition, affiliates may share confidential information regarding your company. When they leave the program, are they allowed to disclose information related to their experience at your company?
Term, Termination, and Suspension clause
Define the start term of the agreement. The term begins when the program accepts the affiliate in most affiliate programs. Also, explain
- How the relationship can be terminated
- If it can be terminated with or without cause
- If affiliates can still earn a commission
- The cases for termination or suspension
- What happens post-termination
- Relevant state laws governing the relationship between parties
- The governing body used in arbitration in case of legal action
- Compliance requirements with FTC (Federal Trade Commission)
- Licenses required by the company and affiliate
- An indemnification clause protecting either party from liability
- Language. State the language used in all communications.
- Jurisdiction, Venue, and Choice of law. State the country/state/territory where any matter or dispute of the agreement occurs.
- Arbitration. If a dispute arises between you or your affiliate, the parties must first attempt to resolve the dispute privately and in good faith.
- Assignment. The agreement and rights can’t be assigned, sold, or transferred.
- Severability. If any provision or subpart of the agreement is determined to be invalid or unenforceable by a court of law, the other parts can be enforced to the maximum extent. This clause states that the terms of a contract are independent of one another.
- No-waiver. If any provision fails to be enforced, the agreement doesn’t constitute a waiver of future enforcement of the conditions or other provisions.
- Headings for convenience only. Headings can’t affect the meanings of the provisions in the agreement.
- Force majeure. The company isn’t liable for any failure to perform due to causes beyond its reasonable control.
- Electronic communications permitted. State if electronic communications are or are not allowed.
This is only an example of the section included in an affiliate agreement. Many companies structure their programs differently and choose clauses to reflect these differences.
To run a successful affiliate program, you need an affiliate agreement. Without one, you won’t control what your affiliates can say or do in promoting your product. Formal agreements reveal your program’s authority and show affiliates that you take your program seriously, helping you attract the best affiliates in your industry.
Disclaimer: Please use our affiliate agreement template as a guide to writing your own. Our document is only a guide and does not constitute legal advice. For any legal questions, we recommend meeting with a lawyer. We also recommend meeting with a lawyer to review your contract once complete.
Frequently Asked Questions about affiliate agreements (FAQs)
Can I use an affiliate agreement contract template?
Absolutely. Drafting up a contract from scratch isn’t necessary. You can use our template to guide you through the sections of your agreement. Simply download our template, determine which sections you need, and fill it out with your business information. Once completed, you must find a lawyer to review the contract, study the language, and ensure its validity. It shouldn’t cost too much money if you’ve written the majority of the contract.
Do I need an affiliate agreement?
Yes, it’s recommended that every affiliate program have an affiliate agreement to outline the responsibilities of your business and the affiliate and avoid potential legal conflict between the two parties.
Is an affiliate an independent contractor?
Yes, an affiliate is an independent contractor, not a part of the company.
What is a reasonable commission rate for affiliates?
The average affiliate commission rate is between 5-30%, but we recommend between 10-20%. Set your commission rate based on 1) what your company can afford and 2) has a competitive advantage.
Do affiliates need to disclose their promotional relationship with a brand?
The FTC (Federal Trade Commission) requires a disclosure statement where affiliate links are used in an endorsement or review and where it isn’t clear that the link is a paid advertisement.
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