Referral agreement template

Referral agreements can help support your business as you seek to reach a wider market and broaden your growth channels.

Discover how referral agreements work, what goes in them and how to generate them more efficiently in this guide. We've also got a free referral agreement template for you to download as a PDF so you can get started straight away.

What is a referral agreement?

A referral agreement is a formal contract between two parties - usually a business and a referrer - under which the referrer agrees to promote the products or services of the business to potential clients.

In return, the business provides compensation, usually in the form of a commission, for any successful referrals that result in a sale.

Referral agreements are there to set out clear expectations, roles, and responsibilities. They detail the terms of the relationship, the method of referral, any restrictions, and the agreed-upon compensation, laying the foundation for a clear process for both parties.

What is the purpose of a referral agreement?

A referral agreement has two goals:

1. To provide businesses with a way to expand their customer base through word-of-mouth marketing, typically leading to high-quality leads; and
2. To allow referrers, whether individuals or other businesses, to earn compensation for their promotional efforts.

For businesses, referral agreements bring credibility and a potential increase in customers. For referrers, they the path for how and when they will be rewarded for their services.

Who is responsible for managing a referral agreement?

The management of referral agreements, or the referral agreement template from which they're created, is often a shared responsibility. The company seeking referrals usually drafts the initial agreement, outlining their expectations, referral procedures, and compensation structure.

The referrer, meanwhile, must review, understand, and accept these terms before beginning their promotional efforts. For a truly mutually beneficial relationship, both sides of the referral agreement need to be comfortable that the contract is balanced.

What are the elements of a referral agreement template?

What a referral agreement looks like and includes can vary depending on the nature of the arrangement. However, it's common for referral agreement templates to include the following sections:

• Parties involved: This section specifically identifies the parties entering into the agreement. It usually includes the business seeking referrals, referred to as the 'Company', and the individual or organization promising to provide referrals, known as the 'Referrer'.

• Terms of the referral: This part lays out the specifics of the referral process. It often covers which channels are accepted, the target demographic, the geographical area or industry the referrer should focus on, and any exclusions. For instance, the agreement might state that referrals can't come from current clients or certain territories.

• Compensation details: This part provides the framework for how the referrer will be compensated. It includes the commission structure, whether a flat fee or percentage of sales, and how it's calculated. It also specifies the payment schedule and method.

• Reporting and tracking: To ensure transparency and avoid disputes, the agreement should define the process for tracking referrals and reporting them to the company. This may involve specific software or unique referral codes, for example.

• Duration of agreement: The agreement should clearly state its effective date and the conditions under which it will end. This could be a specific end date, or it could be tied to certain events, such as performance or a breach of contract.

• Confidentiality clause: Given the potential access to sensitive company information, the agreement should include a clause outlining the referrer's obligation to maintain confidentiality. You may also want the referrer to sign an NDA or confidentiality agreement.

• Non-compete clause: Some referral agreements may include a non-compete clause, restricting the referrer from engaging in similar work with the company's competitors during the agreement and for a specified period after its termination.

• Intellectual property: This section specifies who owns the rights to any materials (like marketing collateral) created during the referral process, as well as any usage restrictions.

• Dispute resolution: The agreement should define how disputes will be handled. This could involve negotiation, mediation, or arbitration, and may specify the jurisdiction in which any legal proceedings would take place.

Each referral agreement should be unique and tailored to the specific needs of the parties involved. It's important to ensure that each section of your referral agreement template is clearly worded, comprehensive, and legally sound.

How to manage your business referral agreement template

How the business manages its referral agreements largely depends on the business's approach to commercial contracts, and whether they use a referral agreement template.

For businesses that operate without a referral agreement template, the process can be labor-intensive. It involves writing each contract individually, conducting internal reviews, and seeking the necessary approvals.

This workload will only multiply as the company's referral network begins to expand. Before long, legal and commercial teams are buried in low-value contract admin. It's rarely the best use of an in-house legal team's time to be drafting and reviewing routine contracts; fortunately, there's technology that can handle the heavy lifting to relieve legal teams of this burden.

Can you automate your referral agreement template?

Fortunately, it's possible to automate your referral agreement template, create contracts from this template, and reduce the manual work required when managing them.

Grab our referral agreement sample template PDF above - or read on to automate the template and create contracts in seconds.

Juro's all-in-one contract management software enables businesses to do just that by offering the following features:

• Automated contract templates: Legal teams can create watertight referral agreement templates in Juro’s rich-text editor. Any updates made to the template will be reflected in the new contracts created using it. No more worries about teams using outdated referral agreement templates!

• Conditional logic: Juro users can automatically apply certain conditions to a referral agreement based on the values in the contract. This eliminates the need to manually create individual contracts for each referrer.

• Integrations with CRM platforms: Juro seamlessly integrates with CRM platforms like Salesforce, making it possible to directly pull data from referrer profiles into contract smart fields and eliminating the need for manual data entry.

• Real-time negotiation: Juro’s browser-native contract negotiation features allow referrers to add comments and redlines to referral agreements in real-time. No more moving between files or tools.

• Native eSignature functionality. Referrers can sign referral agreements as soon as they've read and received them. This is made possible through mobile-responsive eSignature functionality that enables parties to sign on the go.

To find out more about how Juro can enable businesses like yours to generate referral agreements in just a few seconds, hit the button below to book a demo.