Referral Agreement Template

In plain language: Identifies the company receiving referrals and the referring party by their full legal names, and explicitly states that the referring party is an independent contractor — not an employee or agent with authority to bind the company.

Common mistake: Omitting the independent contractor declaration. Without it, a referrer's actions — like promising a discount to a prospect — can be attributed to the company as apparent authority, creating binding obligations the company never intended.

In plain language: Defines precisely what constitutes a qualifying referral — the customer type, the introduction method required, and the action the prospect must take before a fee is owed.

Common mistake: Failing to define when a referral is 'qualified' in writing. Disputes almost always arise from this gap — a referrer claims a customer they mentioned casually months ago entitles them to a fee when that customer eventually signs.

In plain language: States the exact fee or percentage the referrer earns, whether it applies to the first transaction only or on recurring revenue, and the base amount on which the commission is calculated — gross revenue, net revenue, or contract value.

Common mistake: Saying 'X% of revenue' without specifying gross versus net. A referrer expecting 10% of gross invoice value and a company calculating 10% after discounts, taxes, and chargebacks will produce materially different numbers on the same sale.

In plain language: Sets out when commission payments are made — monthly, quarterly, or per-deal — what documentation the company provides to support each payment, and how long the referrer has to dispute a statement.

Common mistake: No dispute window. Without one, a referrer can challenge commission statements years later — long after the underlying deal records may be unavailable or inconsistent.

In plain language: States whether the referral relationship is exclusive — restricting either party from similar arrangements with competitors — or non-exclusive, allowing both parties to work with others in the same market.

Common mistake: Defaulting to exclusivity without defining the scope. An overbroad exclusivity clause can inadvertently prevent a referring partner from earning income in their existing business and may be unenforceable as an unreasonable restraint of trade.

In plain language: Sets the initial term of the agreement, whether it renews automatically, the notice period required to terminate, and which provisions survive termination — particularly the tail period for fees on pending referrals.

Common mistake: No tail period for referrals in progress at termination. A referrer who introduced a prospect one week before termination deserves a fee if that prospect closes — without a tail clause, the company can terminate and pocket the deal without paying.

In plain language: Restricts the referring party from disclosing or using the company's pricing, customer lists, proprietary processes, or other non-public information accessed through the referral relationship.

Common mistake: No confidentiality clause at all. Referrers naturally learn about pricing and deal terms while facilitating introductions — without restrictions, that information can flow directly to competitors or be used to negotiate against the company.

In plain language: Grants the referrer a limited, non-transferable license to use the company's name and logo when making introductions, and restricts any other use of the company's brand without prior written approval.

Common mistake: No IP clause. Referrers sometimes create their own marketing materials using the company's logo or claim an endorsement relationship that does not exist — creating trademark and reputational exposure the company never authorized.

In plain language: Each party confirms they have the authority to enter the agreement, that they will comply with applicable laws, and that the referrer will not make representations about the company's products beyond what the company has authorized in writing.

Common mistake: Referrer makes unauthorized claims about the product to close a referral faster. If the prospect relies on those claims and the product doesn't deliver, the company may face liability for misrepresentation it never authorized.

In plain language: Specifies the jurisdiction whose law governs the agreement and the method for resolving disputes — litigation, arbitration, or mediation first — including the venue and choice of language.

Common mistake: No dispute resolution clause. Without one, every fee disagreement defaults to potentially expensive litigation in a court that may be inconvenient for either party — and small commission disputes rarely justify the cost.

A referral agreement is a legally binding contract between a company and a referring party that defines the terms under which the referrer introduces prospective customers in exchange for a commission or fee. It specifies what constitutes a qualifying referral, how the fee is calculated, when it is paid, and what restrictions apply to both parties. It is the primary document that prevents commission disputes from escalating into litigation.

At minimum, a referral agreement should cover: a precise definition of what counts as a qualifying referral, the commission rate and calculation base, the payment schedule and reporting format, a dispute window for commission statements, the term and termination provisions including a tail period, confidentiality obligations, an independent contractor declaration, and governing law. Missing any of these creates gaps that typically resolve in favor of the referrer in a dispute.

Yes — a referral agreement is generally enforceable as a binding contract when it includes an offer, acceptance, and consideration (the commission), and is signed by both parties. Enforceability depends on the jurisdiction and the specific terms. In regulated industries such as real estate, financial services, and healthcare, referral fee arrangements are subject to additional legal requirements that may restrict or prohibit certain fee structures entirely.

Referral fees vary widely by industry and deal size. Common ranges are 5–15% of the first transaction for professional services and SaaS, 10–25% for one-time product sales, and flat fees of $100–$1,000 per closed deal for lower-value transactions. In real estate, referral fees between licensed agents are typically 20–35% of the receiving agent's commission. Always confirm that the rate is commercially viable over the expected volume before signing.

A referral agreement typically involves a known partner making direct introductions — by email, phone, or in-person — to specific prospects. An affiliate agreement covers a broader, often automated online model where the affiliate drives traffic through tracked links, ads, or content, and is paid per click, lead, or sale. Referral agreements tend to cover higher-value, lower-volume B2B introductions; affiliate agreements suit higher-volume, lower-value consumer or SaaS transactions.

Yes, but exclusivity should be granted carefully and defined narrowly. An exclusive referral agreement prevents you from working with other referrers in the same territory or market segment, which is only commercially reasonable if the referrer delivers sufficient volume. Most referral agreements are non-exclusive. If you do grant exclusivity, include a minimum performance threshold — a specific number of qualified referrals per quarter — that the referrer must meet to maintain the exclusive status.

Yes — informal referral arrangements are among the most common sources of commercial disputes. When a friend or business contact introduces a client and that client becomes a significant revenue source, the absence of a written agreement creates competing recollections about whether a fee was owed and at what rate. A one-page signed agreement eliminates that risk entirely and costs less than one hour of legal fees to prepare.

No. Referral fees are restricted or prohibited in several regulated industries. In the US, the Real Estate Settlement Procedures Act (RESPA) prohibits unearned referral fees in mortgage and settlement services. The Anti-Kickback Statute prohibits referral payments in federally funded healthcare. Securities regulations restrict referral fees for investment products to registered broker-dealers. Legal professionals in most jurisdictions may only split fees with other licensed attorneys under specific rules. Always confirm compliance with industry-specific regulations before entering a referral fee arrangement.

Without a tail period clause, termination ends all fee obligations immediately — including for referrals already introduced but not yet converted. A well-drafted agreement includes a tail period of 60–90 days covering prospects introduced in writing before the termination date, with fees payable on the normal schedule if those prospects convert within the window. Always list the tail period clause as a surviving obligation in the termination section.