Referral Agreement Template: Free Download [+ 12 Key Steps] (2023)

Referrals are one of the best ways for any business to increase sales and build their reputation. People recommend the best company available to their friends and co-workers because they want their co-workers to have the most positive experience. While you can generate referrals in a variety of ways (e.g., through a customer referral program), many industries benefit from formally recruiting referrers and paying them a fee for the business they bring in.

A written referral agreement can help you build a trusted, engaged, and loyal community that drives results. An effective referral agreement template is essential for any business looking to pay referral fees and recruit referral partners.

Thinking about entering into a referral agreement? Our sample referral agreement template has all the essential details. We'll also cover the basics of a referral agreement and when your business should use one.

What is a Referral Agreement?

A referral agreement is a written legal contract between two or more parties that establishes a formal referral partnership. It indicates a specific party's agreement to refer friends and colleagues to a company in exchange for a referral fee.

A referral agreement may also be referred to as a "referral partnership agreement", "referral marketing agreement" or "referral fee agreement". It clearly states all the terms and conditions of the referral partnership, including the amount of commission paid in exchange for each referral. People must read and sign this entire Agreement before becoming your Referral Partners.

A referral agreement is commonly used in corporate environments where representatives from one company refer prospects to another company. But it can also be between a company looking for referrals and a person not affiliated with a company.

Referral agreements protect both you and your business while ensuring the referred person has the best possible experience with your business.

Referral Agreement Template: Free Download [+ 12 Key Steps] (1)

Download our free referral agreement template

The best way to get a referral fee agreement that suits your needs is to write the terms yourself. Of course, you don't have to start from scratch. Download our free referral fee agreement template, then customize it to suit your needs.

(Video) How To Complete the California Referral Fee Agreement - CAR Form RFA

Below we cover all the essential parts of a referral fee agreement that we've included in the template to help you create a contract that best suits the needs of your business and partnerships. But first, here's how to determine if you need a referral fee agreement at all.

When to Use a Referral Agreement?

When deciding whether you need a referral agreement, you need to determine what type of agreementreferral networkYou are interested in education.

If you just want to create an informal referral program on your website (where customers send you information about friends as often as they like via a dedicated page or portal), you don't need a referral agreement.

A brief explanation of how your program works and quick access to the other terms of your program is all you need in this case for clients. Although you give your customers a reward when one of their referred friends makes a purchase, you probably don't intend to consistently pay them cash or give them insider training and information.

Suppose you hope to convert your current customers into formalized partners in a more structured way.Let's say you want to give them access to your company's data and referral marketing strategiesEncourage the most valuable referrals, and would like to promise you money for every successful referral.In this case, you want to have a professional referral agreement.Finally, a formal referral partnership is a type of channel partnership, and each channel partnership must be bound by a contract.

Which Industries Use Professional Referral Fee Agreements?

These contracts are most commonly used with real estate agents and insurance brokers. B2B and SaaS companies also make frequent use of these agreements, as many want to share information in a business-level referral partnership.

What is the Purpose of a Referral Agreement?

The referral agreement sets partnership expectations and protects everyone involvedChannel Partner Relationship. So when working with a referral partner, it is important to have a written agreement.

A brokerage fee agreement sets out the essential terms and conditions for thereferral partnership, so that everyone involved knows what to expect from it. This document also holds both parties responsible for fulfilling their partnership obligations. It lays out exactly what they need to do to earn a referral fee and lets them know how much they will be paid once they meet those conditions.

In addition, a referral agreement is also your best protection against unethical behavior by partners or potential customers who might try to take advantage of your business. You don't want to be caught off guard by a bad actor who doesn't keep their end of the deal - or worse, who tarnishes your reputation by making false claims about your company.

How to draft a referral agreement?

Now that you know if you need one, let's look at how to structure your referral agreements so you can get the most out of your referral relationships. A sample referral agreement should contain the following sections:

(Video) Real Estate Referral Agreement Tutorial

1. The definition

It is always recommended to start by defining the key terms of this agreement. This may seem obvious, but it's key to keeping things simple and clear.

When creating a referral agreement, defining terms used throughout the document like “referral partner” and “referral fee” helps keep both parties on the same page and avoids confusion about the subject matter of the agreement.

2. Relationship between parties

One of the most important aspects of a referral agreement is defining the relationship between the parties involved: why are you entering into this agreement with a specific person? Explain clearly that if the partner successfully refers a colleague to your company, your company will pay the partner a referral fee.

However, it is important to realize that while your business will continue to pay your referral partner for any referrals they bring in, it is still an independent contractor and not your employee.

3. Responsibilities

What does your partner hope for from the agreement and what does he have to do for you? A valid contract clarifies what each party expects from the deal.

The responsibilities section should describe the roles of the brand and partner in the partnership. You should state what each of you is responsible for. For example, indicate if you will provide training to referral partners about your brand, or if you will provide brand assets or other marketing materials to support the promotion.

Then define the specific responsibilities that lie with the referral partner, which includes referring your company to their peers as often as possible. If applicable, describe how much time and effort partners should invest in raising awareness of your products and brand.

Your agreement should also state what you are offering your partner in exchange for their commitment: the rewards or compensation. And if there's any added value your brand offers your partner in exchange for their work — say, educational opportunities or referrals for their own business — clarify that as well.

4. Referral Fee Terms

In this next section, you will describe any terms of your referral fee or referral commission. This includes what type of referral fees are paid (usually the fee is paid in cash, but you can pay affiliates in store credits) and how much you pay out for each referral.

Other questions this section should answer are:

What counts as a successful referral?In other words, what needs to happen for an affiliate to earn a referral fee?

  • This is usually the case when a potential customer makes a purchase.
  • However, some B2B companies pay lower referral fees for qualified leads due to the longer sales process.

When is the partner paid?

  • Immediately, after each transfer?
  • Monthly, flat rate?

How is the fee calculated?

  • Is it a flat rate?
  • A set percentage of each sale?
  • Or have you set a series of tiered flat fees based on a product's value?

What are the other important terms of the fee?

(Video) How To Wholesale Real Estate Step by Step (IN 21 DAYS OR LESS)!

  • Does the affiliate only get the fee if an order is not returned or canceled within a certain period of time?
  • Does the affiliate have to reach a certain total turnover before receiving their first payment?

Finally, are there any additional rewards or bonuses based on a referrer's performance?

  • For example, will a person's commission percentage increase after they reach a certain milestone?
  • Or will the top monthly referrers get tangible rewards as bonuses?

Pro tip:How to calculate a referral fee that is motivating but affordable for your business over the long term? Consider the following:

  • How much you spend to make a sale
  • The duration of your sales process
  • your pricing structure
  • When and how often your business gets paid for sales
  • The schedule and bonuses you want to implement

For all the details on how to calculate the best referral fee for your business, check out our full guidePayment of referral fees to individuals.

5. Advertising Expectations

You and your partners need to agree on how your brand should be promoted so partners don't misrepresent you or unwittingly give inaccurate information about you to their peers.

When considering how partners should represent you, establish the following in your agreement:

  • What message should your partner use when referring others to your brand?
  • Which audiences should your partner share your brand with?
  • What key information should partners share about what sets your product or service apart and what needs it meets?
  • Are there any advertising methods younotdo your partners want to use?
  • What language should theynotUse related to your products?
  • Are partners expected to only recommend people they already know and have a relationship with? (This is the expectation in most referral fee agreements.)

6. Referral Process and Follow-up

One of the biggest potential sources of frustration is when partners are confused about how to recommend or when they don't get credit for the recommendation. The best way to avoid confusion is to make the process as simple as possible: specify what needs to happen in order to submit referrals, and make sure they understand how your referral software tracks those referrals and rewards sent.

When writing your referral agreement, include how you want referral partners to refer their friends, including:

  • How they should submit referrals (e.g. via a referral form or portal)
  • How to invite colleagues (e.g. via email or direct social media message)
  • What parts of their referrals' contact information they need to submit

Then describe how they can use the software to track the status of their referrals.

7. Non-Exclusivity Clause

A referral agreement should include a non-exclusivity clause stating that the affiliate remains independent of you and is free to partner with other companies. This protects both sides from getting locked into something that is no longer conducive if the partnership doesn't work.

However, it is not uncommon for a company to wish to restrict its partners' ability to work with direct competitors. You can add an exception that prohibits referrers from working with competing companies for the duration of the partnership or even for some time after the partnership has ended.

8. Secrecy and Confidentiality

If you share confidential information with another professional party, you should both agree to keep that information safe for the benefit of your business. This section deals with non-disclosure and confidentiality, which means that as a provision of this Agreement, neither party will disclose trade secrets or other confidential information to anyone outside of your organization.

9. Withdrawal from the contract by the partner

Referral fee agreements are typically indefinite in duration — meaning they last until the company or affiliate decides to terminate the agreement, giving the affiliate more flexibility. In your referral agreement, you should include all the details of how to terminate the contract. You don't want something unexpected to happen and leave your partner confused about how to end their commitment. But you also can't allow partners to end the relationship right away, for whatever reason.

(Video) The Most Powerful Referral Program On The Market! - Get The Referral

What are legitimate reasons to terminate an existing referral agreement? How far in advance does a partner need to give notice that they want to end their contract? In most cases, a notice period of at least 30 days is required. Also, your partner needs to know exactly what will happen if they decide to end their contract.

10. Termination

The termination section (sometimes referred to as the severability section) is required in any joint venture and is particularly important for a partnership agreement. It forms the basis for how you can deal with any ethical or legal issues that arise, e.g. B. a breach of contract. Think about the worst-case scenario that occurs in your referral partnership and decide on the follow-up action you would take if any of those things happened.

Which unethical or problematic behavior of the partner is a reason for the immediate termination of the partnership agreement? This may include acts such as blatantly making false claims about your business, making sales with bogus companies to improperly earn a commission, ignoring intellectual property rights, or engaging in legal issues outside of your business that negatively impact your reputation could.

11. Miscellaneous Legal Provisions

There are many other legal provisions that you could include in your referral agreement, including:

  • A section setting out how legal conflicts and disputes will be resolved (usually through arbitration)
  • The legal process for breaching this Agreement
  • Conditions for Reporting Taxes and Fees: For example, explain that if an affiliate earns over $600 in referral fees, the law requires it to be reported to the IRS
  • Indemnity Clause: This means that you will pay the partner's legal fees if they have external legal concerns. It also protects your brand from liability limitations arising from the partner's activities, as well as from any damages that occur
  • Disclaimers

Finally, share any state and national laws that may apply to your referral partner's activities. Applicable laws vary by region and industry. Keep in mind that real estate, financial, automotive, and insurance companies are often bound by multiple laws regarding referral fees.

12. Signatures

Include space at the end of the Agreement for you (or another representative of your company) and the Referral Partner to sign the Agreement, along with the effective date of this Agreement. This makes the Referral Agreement binding and fully effective, showing that your Affiliate has agreed to all of the terms of this Agreement. Once affiliates have signed the contract, they are immediately eligible to earn commissions for successful referrals.

Referral Agreement Tips

As promised, here are some tips to help you create better referral agreements:

Hold a Zoom meeting with your new partners to discuss the contract in person and answer any questions they have.

This is important because it allows you to get to know your partners better. It ensures that everyone is clear about what is expected of them in this agreement.

Make it clear why each section is important to both you and the partner.

Both parties should know how all of these agreements work, what they mean for each party involved, and why these things are important.

Emphasize what's in the relationship for the partner.

You want your partners to know how much value they can get from this partnership and what kind of benefits could come to them.

Be as specific as possible with the terms, especially with referral commission agreements.

(Video) How to form an LLC with Legalzoom

If commission rates or terms may change over time, make that clear.


Remember that a referral fee agreement is only part of the equation when it comes to securing referrals. You can get as many people as possible to sign a referral fee agreement with you, but if your product or service isn't up to par, they won't refer anyone. So make sure your product or service is top notch before charging anyone with a referral fee agreement.

You must also follow other recruitment, training, follow-up, and monitoring best practicesReferral Partner. And for best results, you need to choose the right referral software to manage those partnerships.Learn moreabout how Referral Rock can help optimize referral partnerships, orArrange a demoToday.


1. What to Do AFTER You Form an LLC - 6 Steps You Must Take
(Jim Hart)
2. How to Create a Fillable Form in Word | Microsoft Word Tutorials
(Lisa Doe)
3. How to fill out the Referral Fee Agreement Form in CAR org to send a referral
(Medini Pradhan)
4. 3 Simple Steps To Close A Sales Deal 🤝
(Hardcore Closer)
5. Get Creative | How Do I Choose My Market In 10 Steps
(Pace Morby)
(Vouga Elder Law)
Top Articles
Latest Posts
Article information

Author: Virgilio Hermann JD

Last Updated: 03/13/2023

Views: 5803

Rating: 4 / 5 (41 voted)

Reviews: 80% of readers found this page helpful

Author information

Name: Virgilio Hermann JD

Birthday: 1997-12-21

Address: 6946 Schoen Cove, Sipesshire, MO 55944

Phone: +3763365785260

Job: Accounting Engineer

Hobby: Web surfing, Rafting, Dowsing, Stand-up comedy, Ghost hunting, Swimming, Amateur radio

Introduction: My name is Virgilio Hermann JD, I am a fine, gifted, beautiful, encouraging, kind, talented, zealous person who loves writing and wants to share my knowledge and understanding with you.