Find out how an affiliate agreement can protect you, your affiliates, and your business.
You know you have a great brand. You believe in your product or service (whether it be a course, coaching sessions, web design, content writing, or something else that’s really rad), and you know your customers will love it, too… if you could just reach them. That’s what’s so great about affiliate programs! They allow you to reach out to potential customers that maybe you wouldn’t have been able to before.
That means more traffic to your site and more money in your pocket.
But if you don’t have an affiliate agreement in place before you start running your program, you could be setting yourself up for a disaster. Keep reading to find out some affiliate program basics and how to implement the 1 thing you need to run your affiliate program legally and effectively: an agreement!
What Is an Affiliate Program?
An affiliate program is an arrangement between you and another person (your affiliate) where your affiliate agrees to market your product or service for a commission.
For example, say you’re a life coach. Someone who believes in your brand and wants to help get the word out—for a commission (percentage of your sales)—will market your product or service through their own channels (for example, through Instagram or other social media, or even through their own website).
Basically, a potential buyer or customer will click on their affiliate link, which brings the buyer to your website. If that buyer makes a purchase, your affiliate will get a percentage of that sale. You might remember those little “Paid Promotion” or “Sponsored Post” flags that have popped up on Instagram posts—those are affiliate advertisements!
Why You Need an Agreement for Your Affiliate Program
You know yourself and the way you market your product or service. But other people can be unpredictable. The best way to protect your business is to set up an affiliate agreement. It can:
- stop your affiliates from using unacceptable or shady marketing practices with your brand/product name attached to it
- set expectations about payment (when your affiliates will get paid, how they will get paid, and what happens to their pay if someone returns a product or asks for a refund)
- protect your intellectual property (for example, you can prevent an affiliate from using your materials, branding, images, or other things without proper permission), and
- give you some solid support should your affiliate ever decide to sue you (or if you have to take legal action against them)
Okay, those are the basics. Now let’s dig into what should be included in your affiliate agreement.
The Simple 5-Ingredient Recipe for an Awesome Affiliate Agreement
- Commission rates and payout details (1)
- Marketing compliance (1)
- License to use promotional materials (1)
- Intellectual property ownership (1)
- Non-disparagement (1)
Step 1. Start with terms about commission rates and payout details. The most important thing that affiliates want to know is how much, when, and in what way they’ll be paid. This is where you can write out what percentage of sales your affiliate will get, how often you pay them (for example, do you pay them out weekly? Monthly?), and how they will receive payment (PayPal? Bank transfer?).
It’s also a good idea to put a term in here about what happens if you’ve already paid your affiliate, but then a buyer returns the product or asks for a refund afterward.
Step 2. Put in some terms about marketing compliance. That means how your affiliate is allowed to market your product or service. Your affiliate must comply with marketing laws (set out by the Federal Trade Commission) and with the European GDPR.
This is super important, because YOU can be held liable if your affiliate does something shady or if they don’t disclose on their affiliate promotion that they’ll get a commission. Yikes!
Step 3. Add a license to use your promotional materials. This sets out how your affiliate can use your marketing stuff (images, keywords, phrases, etc.) when promoting your product or service.
Don’t forget: you need to add a term that says this license is revocable and non-exclusive. Revocable means that you can cancel the license at any time, meaning that you can stop them from using your marketing and promotional materials, and non-exclusive means that you, as the business owner, are allowed to give the same marketing materials to other affiliates for them to use in their affiliate promotions.
Step 4. Do not skip this step (unless you want this recipe to turn into a big old mess)! Mix in terms that clarify intellectual property ownership.
(If you haven’t already, check out these blog posts on intellectual property for more info on trademark and copyright: How to Protect Your Business with Trademark and Copyright and 3 Reasons to Trademark Your Business Name Right Now.)
We’ve talked about intellectual property on the blog before (see the above links!), but basically it includes trademark, copyright, and patent (we won’t talk about patents here).
A trademark is a word, phrase, or symbol that sets your brand apart from others. It could be your business’s logo, slogan, or another mark that symbolizes your brand.
Copyright is protection over your creative works (for example, a graphic design you’ve done, content you’ve written, a course you’ve made, etc.).
Terms that set out who owns what material and how those materials can be used should be included here.
Step 5. Toss in terms on non-disparagement. These tell your affiliate that they can’t badmouth you (or your competitors) at any time.
BONUS: To make this recipe really kick, make sure your agreement is readily available to your affiliates (on your affiliate portal or via email).
Make sure your affiliates sign the agreement (for example, using an electronic signature) or use a two-step, click-to-agree online form (where they have to click a box to signal that they agree to the terms and then click “accept”.
If you make any changes to the agreement, make sure you tell your affiliates right away!
Recipe yields: trust in your brand and less headaches down the road.
What Is the Easiest Way to Draft an Affiliate Agreement?
By far, the easiest method to get an affiliate agreement started is to use a template. You may be tempted to craft an agreement yourself, but doing so can cause more legal troubles rather than solving them.
The Affiliate Agreement Template by Artful Contracts is drafted by an experienced lawyer and includes all the terms you need to run your affiliate agreement safely and legally.
The agreement template will help you quickly and easily implement an agreement for your program, and you’ll have financial protection, more sales, and peace of mind.
Discover more ways to protect your business: Check out the 9-Step Checklist to Protect Your Business Legally!