If someone you know starts a business or needs more customers and you are in a position to recommend them, a Business Referral Agreement could be a course for both of you. You can keep sending customers to the person, in which case you may not technically need an agreement, with the idea that you also receive a fee for each customer referred.
The Business Referral Agreement also works the other way around. If you are the one in need of clients, you can ask someone with a more significant business or a more extensive network to sign this agreement with you to send potential clients over in exchange for a fee. In any event, the deal is designed such that both parties win, which, ideally, the clients referred will also be happy.
In a Business Referral Agreement, one party agrees to refer clients to the other for a commission or referral fee. It can be signed by two companies or independent contractors, or any combination.
An essential part of the agreement is the referral fee. You can have a fixed price for every client recommended or a commission expressed as a percentage of the amount the client spends with another party.
The agreement is usually entered into by people who provide connected services and often have the same client base. For example, if you are a graphic designer and your clients often ask you to recommend a video editor, you can sign a Business Referral Agreement with a video editor. You may already be recommending them, except that, with this agreement, you are officially entitled to a referral fee.
If both of you need more clients, or if you both could use a referral fee, you could sign a Mutual Referral Agreement instead. Like the Business Referral Agreement, the only difference with the mutual variety is that both parties agree to refer potential clients to the other.
Depending on your state, a Business Referral Agreement may also be known as:
Two companies can enter into a Business Referral Agreement, but a company and an independent contractor can also sign it. Anyone who is looking for a way to get more clients and grow their business could benefit from this agreement. Of course, you will want to enter such an agreement with someone whose clients overlap naturally with yours. It may not make sense for you to sign a Business Referral Agreement with someone who works in a completely different field, though that would not preclude you from using this agreement if you wish.
On the other hand, if you simply know many people, you can earn a commission for every client you recommend to someone else. You can potentially help other businesses grow, make your customers happy, and create a passive income source. This is a common practice in real estate, finance, and construction. Today, many online businesses sign a sort of Business Referral Agreement, otherwise known as Affiliate Programs, where you insert a link to someone else's service or product on your website for a small commission whenever someone buys something through your link.
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A Business Referral Agreement doesn't have to be notarized. It's enough for both parties to sign the document to make it legally enforceable. If you don't want to notarize it, it can be helpful to witness the signing. If you are an independent contractor signing a Business Referral Agreement with a company, bear in mind the company may ask you to complete an IRS Form W-4 before administering payment.
After downloading the Business Referral Agreement, you should print at least two copies, one for each of the parties involved. You can keep the document with your records and give another copy to your attorney, as applicable. If you want to make changes to the agreement, you can create a new deal.
By signing a Business Referral Agreement, one party agrees to refer clients to the other in exchange for a fee or commission. In contrast, with a mutual Referral Agreement, both parties mutually agree to refer potential clients to each other.
A Business Referral Agreement isn’t exclusive by default, but you can add an Exclusivity clause as appropriate. Our site allows you to customize your agreement and add additional clauses. The exclusivity clause, in particular, prevents the other party from referring clients to your competitors – or rather, anybody else at all.
Yes, you can use a Business Referral Agreement for an online affiliate program. You can include affiliate links to someone else’s products or services on your website and earn a commission for every purchase. All you have to do is state whether you will get a flat fee for each purchase consummated through your link or a percentage of the sale.
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