What Is An Affiliate Agreement?
An affiliate agreement is a legal contract between a business and an individual or company (known as the affiliate) that promotes the business’s products or services in exchange for payment. A written contract helps avoid confusion and protects both parties if something doesn’t go as planned. It is sometimes also referred to as an affiliate marketing agreement, affiliation agreement, or referral marketing contract.
This type of agreement lays out exactly how the relationship works. It covers topics such as:
- How the affiliate earns money
- What they can say or post
- What each party is responsible for
An affiliate agreement is not just about payment. Its purpose is to:
- Set clear rules for how promotions must be handled
- Ensure proper payment, including commission rates and timing
- Protect both parties’ rights, including brand use, content ownership, and liability
For example, let’s say a Twitch streamer features your gaming headset during their livestream and drops a referral link in their chat. If someone clicks the link and makes a purchase, the streamer (in this case, the affiliate) earns a commission. An affiliate agreement ensures that link usage, payment terms, and all other roles and responsibilities are clearly outlined for both parties.
When Do You Need an Affiliate Agreement?
You may use an affiliate agreement any time you’re entering a business relationship where someone promotes your products or services in exchange for compensation. Whether you’re setting up a formal affiliate program or working with a single partner, this agreement helps protect everyone involved by maintaining transparency from the outset.
Here are some common situations where a written affiliate agreement may be useful:
- Launching an affiliate or referral program: If you’re inviting multiple people or companies to promote your business and earn a commission, a contract can help you set clear rules from the start.
- Working with bloggers, influencers, or streamers: A Twitch streamer, YouTuber, or popular blogger promoting your product should be under a contract that outlines how they should present your brand, the type of content they’ll create, and how their commissions will be calculated.
- Collaborating with affiliate networks or agencies: If a third-party network manages promotions for you, an affiliate agreement makes sure all parties are on the same page.
To save time, you can use Legal Templates’s free affiliate agreement template. Our guided form makes it easy for you to fill in your details in minutes and download your agreement in PDF or Word format.
An affiliate agreement also offers important legal and tax protection.
- The Federal Trade Commission (FTC) states that affiliates must be transparent about when they receive compensation for promoting a product or service. They can’t hide it from their audience.
- If you’re in the US and pay an affiliate $600 or more in a year, the IRS typically requires you to send them a Form 1099-NEC to report the amount earned clearly.
What to Include in an Affiliate Agreement
A well-written affiliate agreement clearly explains who is involved, how the partnership will work, and how things will be handled in case something goes wrong. Here are some key sections a strong affiliate agreement should include:
Identify Parties Involved
Begin by naming the people or businesses involved in entering the affiliate agreement. Ensure that you specify whether each party is an individual or a business entity. Include the affiliate’s name, contact information, and any website(s) where promotional content will be published.
Define Responsibilities of Each Party
Clearly define each party’s role in the agreement. The affiliate is typically responsible for promoting a product or service without making any misleading claims, while the company provides marketing materials and tracks results. This section should describe what’s being promoted, for example, a software subscription, a product line, or a service.
Specify Payment Terms
This section outlines how the affiliate will be compensated. This might include:
- A set commission rate, usually as a percentage of each sale
- Whether commissions are based on sales, clicks, or sign-ups
- How and when payments will be made (monthly, quarterly, or once a minimum threshold is reached)
Outlining the payment terms clearly within the affiliate agreement helps build trust and avoid misunderstanding later on.
Describe Link Usage
Clearly describe in the agreement how the affiliate can use your promotional links and brand assets. This may include specifying where links can appear (on blogs, email newsletters, Twitch channels, or other social media platforms).
You can also mention guidelines for ethical promotion (such as no spammy tactics or false claims). Moreover, the agreement can outline whether the company can monitor, review, or ask for changes to how the affiliate displays its brand. These rules can help protect a company’s reputation while providing affiliates with a clear direction.
Outline Confidentiality and Intellectual Property
Since affiliates receive private business information or have access to branded content when they enter into an agreement, both parties should agree on how that information is protected. The affiliate agreement should clearly state that all confidential information must be kept private and that the affiliate does not acquire ownership of any logos, product images, or trademarks.
You may also consider using a separate non-disclosure agreement for extra protection. Learn more about NDA’s in our guide on whether you should sign an NDA.
Include Indemnification Clause
Mention how legal risk will be managed by clarifying who’s responsible if something goes wrong. You may include:
- An indemnification clause, stating that each party is responsible for its own actions
- A limitation of liability, so neither side is legally responsible for indirect or unforeseen losses
- A force majeure clause, which protects both parties if a natural disaster or similar event interrupts business
Add Final Terms
State who should receive legal notices. Provide the full name and mailing address of the individual you identify. Then, clearly indicate which state’s law will apply if legal issues come up, especially if the affiliate and company are based in different locations. Be sure to explain how any disputes will be handled, whether through the court system, mediation, or arbitration. Once you’ve agreed to everything, both parties should sign and date the agreement to make it official.
Sample Affiliate Agreement Template
Take a look at a sample affiliate agreement template below. Then, use our step-by-step questionnaire to customize and download your affiliate agreement in PDF or Word format.
