Whether you’re running an affiliate program or are looking to form a new affiliate relationship, an affiliate agreement lays out the terms so both parties are aware of their commitments. Learn more about what an affiliate agreement is and download a template in PDF or Word format.
What is an Affiliate Agreement?
An affiliate agreement forms a legally-binding relationship between two parties (typically, two businesses), where one party (the “affiliate”) receives compensation for promoting the other (the “company”) to visitors of the affiliate’s website or app.
A typical agreement is structured to provide compensation to the affiliate in one – or both – of the following ways:
- When a visitor purchases goods on the company’s website
- When a visitor clicks on the link to the company’s website (called “pay per click” or “PPC”)
The payment structure you choose will depend on the amounts to be paid by the company to the affiliate. Consider the following factors when deciding how to outline compensation in your affiliate agreement:
- Conversion rate of the company’s site
- Average number of sales
- Average profit margin
- Traffic to the affiliate’s site
- Percentage of users that are likely to click on the link to the company’s website
There are no hard and fast rules when it comes to drafting an affiliate agreement. Therefore, it’s important to run the numbers and make a deal that is beneficial and sustainable for both parties.
An affiliate agreement is also known as:
- Affiliate Program Agreement
- Affiliate Partner Agreement
- Online Affiliate Agreement
- Website Affiliate Agreement
- Marketing Affiliate Agreement
Who is an Affiliate?
An affiliate is someone who is compensated for promoting the product and services of another company. Today, with so many people using the internet, an affiliate may have thousands or even millions of followers who are interested in what he or she has to say.
An affiliate has an opportunity to make money by promoting certain products and services. For example, one company may partner with an affiliate, asking that affiliate to promote the products and services of the company. Then, the affiliate will be compensated if his or her followers purchase products and services from the website of the company. This allows the company to increase its sales while providing the affiliate with an opportunity to make money.
When to Use an Affiliate Agreement?
Use an affiliate agreement when you want to form a relationship whereby the affiliate receives compensation for specific actions that promote a company’s services, products, website, or app. Whether you’re the affiliate or the company, an affiliate agreement should be used whenever forming an affiliate relationship. If you’re a company and have an affiliate program, you can use the same agreement for all affiliates.
What Should be Included in an Affiliate Agreement?
It is critical for you to make sure all necessary sections are included in an affiliate agreement. That is where a simple affiliate agreement template can be helpful. Some of the most important sections that you need to include in your affiliate agreement template are:
Definitions
You need to define the terms that will be used throughout the agreement. For example, you need to specify what a website is, what the affiliate application process is, who the affiliate is, and the company providing the affiliate program. You should also specify what the affiliate program is. These definitions are important because they allow people to avoid any potential misunderstandings when they read the rest of the agreement.
Affiliate Site and Content
You need to specify the website included in the affiliate program. This section may also specify the steps that need to be completed before an individual or a company will be accepted into the affiliate program. This section should also cover the content included in the affiliate marketing program.
Compensation for Your Referred Traffic
The contract has to specify the exact compensation for any referred traffic coming from the affiliate. Generally, compensation is a percentage of the total sales generated from that traffic, but it could also be a flat fee per purchase. The compensation might be different depending on the nature of the product purchased, and the compensation might scale up or down based on the size of the referred traffic.
Fulfillment and Customer Information
This section should specify which party is responsible for fulfilling all purchases made by customers. Generally, the affiliate is responsible for directing traffic to the company website, but the company is responsible for fulfilling any of the orders placed by those specific visitors.
Limited License Rights
This section should specify the rights of the affiliate with regard to the products or services the affiliate is promoting. This section is important because it specifies that the company still retains rights to the products and services being sold even if the affiliate is promoting them on an external website. The section should also specify how certain links promoting products and services will be used.
Representation and Warranties
Representations and warranties are any assertions or assurances given by the parties to the agreement. This section should specify that the affiliate entering into this agreement is legally capable of understanding the agreement and is allowed to enter into the agreement. The section should also specify that the affiliate is not to share any information that he, she, or it knows is false.
Disclaimers
A disclaimer includes information about liability issues specific to the content found on your website. It also warns users of any potential risks of using your site and specifies that the company is not to be held responsible for any content on the website.
Limitation of Liability
This portion of the contract will specify that the company is not to be held liable for any damages or costs related to the loss of business opportunities or punitive damages. This section should also specify a few examples where this limitation of liability might apply.
Term and Termination
The section will specify the length of the agreement. It may be specified in terms of years, or there might be a date on which this agreement expires. It may also specify whether either party (or both) can renew the agreement. The section will also specify conditions under which the contract can be terminated without either party being found in breach of contract.
Relationship Clause
The section is important because it specifies that the affiliate is an independent contractor and not an employee. The section will release the company from providing employee benefits as dictated by law.
Confidentiality
This section will specify what information related to products, services, the nature of the agreement, and the company are to be held confidential. The affiliate may receive access to information about specific products and services provided by the company that are not available to the public. This section should require the affiliate to keep that information confidential.
Waiver
This section will release the company from responsibility under certain situations. For example, if the company website is inoperable, if there are bugs on the website, or if there are additional fees incurred by the affiliate as a result of payment processing, this section would release the company from responsibility for these issues.
Indemnification Clause
This section compensates a party for harm or loss arising in connection with the other party’s actions or failure to act. Indemnification shifts liability from one party to the indemnifying party
Assignment and Succession
This section specifies that the affiliate is not allowed to take this agreement and transfer it to somebody else. If the affiliate wants to pass the agreement to another party, that party would have to enter into its own agreement with the company.
Choice of Law
This section specifies the laws of the state that will govern this agreement. If the affiliate is located in one state and the company is located in another state, the company might want to draw up a contract to make sure the laws of its state preside over this agreement.
Dispute Resolution
If there is a dispute between the two parties, this section will specify how it will be resolved. If the matter has to go before the courts, this section should specify the court system responsible for hearing the arguments. If mediation or binding arbitration is involved, this section should specify the preferred method.
Waiver of Jury Trial
Generally, the parties involved in this agreement do not want a jury trial. This section specifies that, if there is a dispute, both parties will immediately waive their right to a jury trial. A jury trial might not be preferred because all of the information would be made public.
Remedies
This section specifies that all remedies should be pursued to rectify any disagreements and that one remedy should not be seen as limiting any other remedy.
Force Majeure
A force majeure clause means that one party cannot be held responsible for a breach of contract if unforeseen consequences are responsible for the bridge. For example, a natural disaster, an act of God, or an act of War could cause this contract to be breached, but the other party will not be able to sue under those specific circumstances.
Interpretation
This section specifies that the affiliate had ample time to review the agreement, that they had ample opportunity to seek legal counsel, and that the affiliate is entering into this agreement of his or her own free will after having reviewed and adequately understood all of the information included in the contract.
Severability
This section specifies that if any part of the agreement is found to be unenforceable, it will be omitted, but the rest of the contract will remain in force.
Amendments
This section specifies that the company has the right to make changes or amend the contract and that the company will notify the affiliate using a preferred method. This section will also specify how long the affiliate has to review the changes to the contract before those changes become effective.
Our affiliate agreement template below includes all the vital information you should include, so you don’t have to worry about missing anything out.
Affiliate Agreement Sample
Here’s what a typical Affiliate Agreement looks like:
Why Use an Affiliate Agreement?
There are several reasons why you should use an affiliate agreement. They include:
- Rights and Responsibilities: The agreement will clearly specify the rights, responsibilities, and expectations of each party entering into the agreement.
- Customizable: You can customize the contract to meet the needs of both parties. For example, you can change the contract depending on the products and services being promoted and depending on the payout structure being used to compensate the affiliate.
- Payment Terms: This agreement can also specify when and how the affiliate will be compensated. For example, it may specify the commission or flat fee the affiliate gets in exchange for each sale while also specifying how the affiliate will be paid.
For all of these reasons, it is critical to use a simple affiliate agreement template that ensures nothing gets overlooked.
Affiliate Agreement FAQs
What is the purpose of an affiliate agreement?
The purpose of an affiliate agreement is to specify the obligations held by both parties entering into an affiliate agreement. For example, an affiliate agreement should specify which products and services the affiliate is promoting, boundaries and guidelines for how those products and services can be promoted, and the payment structure or commission model that compensates the affiliate accordingly.
What is an affiliate marketing agreement?
An affiliate marketing agreement is a contract between a company or brand and an individual or company promoting specific products and services. Generally, this agreement will specify how the affiliate will promote certain products and services and how the affiliate will be compensated for his or her time and efforts. The agreement should also specify the rights and responsibilities of the parties entering into the contract.
Do I need an affiliate agreement?
You need an affiliate agreement because it specifies your rights and responsibilities. If you are partnering with an affiliate who will promote your products and services, the agreement will specify your rights and responsibilities toward the affiliate. If you are the affiliate, the agreement will specify the products and services you will promote and how you will be paid for promoting those specific products or services. This agreement is important because it will protect your rights and interests.