Are you ready to set up an affiliate program but unsure how to create a simple affiliate Agreement?
This article explores essential elements of affiliate contract compliance, detailing key components for your program's Terms and Conditions and offering practical tips to kickstart your journey.
Benefits of a Clear and Simple Affiliate Agreement
Affiliate Terms and Conditions aim to set rules and expectations, and to have a legally binding document to protect your company and its affiliates.
Proper affiliate agreement compliance not only helps build trust with your partners but also ensures your program operates within legal boundaries.
An affiliate contract provides the affiliate with:
- An understanding of their rights and obligations as an affiliate at your company.
- Clarity on how referrals count towards their commission.
- Transparency on commission amounts and for how long they repeat.
- An understanding of the promotions allowed and which ones aren't.
- Rules and limitations on laws and data management e.g., spam acts.
An affiliate contract provides the company with:
- Rights and obligations as a company and affiliate program manager.
- Protection from fraudulent affiliate activities.
- Boundaries between the affiliate’s promotions and your own brand.
- Ability to terminate or temporarily disable affiliate accounts.
- The right to review affiliates’ activities, referrals, and commissions.
Creating Your Affiliate Agreement: Where to Start?
Your affiliate contract must align with your brand, marketing, and sales strategies. Therefore, rules for affiliate programs vary widely from company to company. It’s important to think carefully about the strategy behind your affiliate channel and what you consider an eligible affiliate referral.
Some things to consider before writing an affiliate contract:
- What types of promotions are allowed?
Many SaaS affiliate programs ban the promotion of affiliate links through PPC. - How do you want your brand to be represented?
Communication about tone of voice and brand representation can be included in e.g., a separate brand guide. - How much commission do you pay for each referral?
Some programs opt for a flat fee; a one-time commission. While others provide lifetime commission for as long as the referral is a customer. - How long is your cookie affiliate valid?
What are the criteria and requirements for a qualified referral on the technical side?
The following affiliate program terms and conditions template acts as a guideline and should be customized. Always consult your internal (legal) team or an affiliate marketing agency to help create an affiliate Agreement that fits your business needs.
Elements of an Affiliate Agreement
Every affiliate agreement will look different, but here are the main elements you can include to ensure affiliate contract compliance.
1. Introduction to the Agreement
In this section, you briefly describe the purpose of the affiliate agreement and what the reader can expect from this document.
Example:
This is an Agreement between you and insert company name. Please read these terms with care. This Agreement outlines the rules and regulations of the affiliate program for insert company name.
By accepting these Terms and Conditions, you agree that you have read and understood these and agree to be legally responsible for each and every term and condition herein.
2. Definitions
Here we elaborate on key terms that are mentioned throughout the Agreement. This is especially important for terms that might cause confusion.
Example:
In this Agreement, the following definitions will apply.
“Affiliate” or “Affiliates” are the individuals or entities in the affiliate application that intend to participate in the Affiliate Program and who will legally be bound by the Terms and Conditions herein.
“Customers” are the individuals and legal entities that are the end users of insert company name.
“Affiliate Program” means the program operated by insert company name, to which the Affiliates are enrolled and rewarded in the form of monetary compensation for referring customers.
“Affiliate Link” is the personal link from an affiliate participating in the affiliate program, used to track referrals and commissions. The link is located at the affiliate’s website and promotional channels, and when clicked on by a potential customer, it directs to insert company website.
“Referral” stands for a potential customer who was led to insert company website with the use of the affiliate link for a free trial.
“Commission” means the money that an affiliate earns from each referral that converts into a sale.
“Abandoned Affiliate Account” means any affiliate account where the Affiliate Dashboard has not been logged into for a period of 12 months, or has no affiliate referrals posted during a period of 6 months.
3. Participation Requirements and Partner Obligations
Here we outline the requirements to join the affiliate program, and what the expectations and obligations are for the affiliate. We can also mention how the application process is handled.
Example:
To be eligible to join the affiliate program, you must agree to the affiliate program terms and conditions: be at least 18 years old and have a functioning website.
In the application, you must provide your full name, website address, and any additional information asked. After signing up for the program, we will review your application. We reserve the right and sole discretion to reject your application, and re-evaluate your application at any point in time.
You are only allowed to create and use one affiliate account.
You will receive a confirmation of your participation when the application is approved. After approval, you have direct access to your affiliate dashboard and personal referral link.
The affiliate’s main role is to operate as a marketing promoter of insert company name, and to introduce potential customers to the website insert company website. The affiliate is allowed to use their affiliate link on their website and refer potential customers to insert company name.
As a participant in the program, you have the right to market and promote the products and services of insert company name. To do this, you may use marketing materials from insert company name, provided through your affiliate dashboard, such as available banners and guidebooks.
The affiliate is responsible for keeping company information on their website and in their promotions up to date. For example, if there is a change in pricing, package, or service at insert company name, it's the affiliate’s sole responsibility that information is updated.
4. Policies and Prohibited Activities
Policies can cover anything from local laws to country-wide laws such as anti-spam laws in the US or this European anti-spam law. As well as other internet and communication laws for behavioral and promotional policies. This section also includes any type of affiliates, websites, and content the company does not want to be associated with.
To add, it covers rules for email marketing, PPC, and other paid campaigns, as well as the overall representation and brand guidelines for affiliates to represent your company.
You will also need to consider if you want to allow coupon websites in your program. And what the rules are for using and distributing discount codes.
Example:
As a condition to your participation in the affiliate program, you agree that while you are an affiliate at insert company name, you will comply with all laws, ordinances, rules, regulations, orders, licenses, permits, judgments, decisions, or other requirements (collectively, “Laws”) of any governmental authority that has jurisdiction over you.
This is regardless of whether those Laws are now in effect or later come into effect during the time you are an Affiliate or participating in the affiliate program, including, without limitation, during the application process.
Without limiting the foregoing obligation, you agree that as a condition of your participation in the affiliate program, you will comply. This is related to all applicable federal, state, or other Laws that govern marketing email, including without limitation, the e-Privacy Directive, the CAN-SPAM Act of 2003, and all other anti-spam laws.
By participating in the program, the affiliate agrees that their website and other promotional channels does not contain or promote:
- Copyright, trademark, or other intellectual property rights.
- Adult, violent and defamatory content.
- Gambling, including and without limitations, sports books, poker, and (online) casinos.
- Religious and or political viewpoints.
- Any content or services that violate the law.
Paid promotions and PPC bidding on the following keywords, and misspellings of these, are not allowed: insert company name, insert company name discount, insert company name coupon. It can’t be separate or in combination with other keywords. In order to use any insert company name related keywords through paid advertising, you need prior approval of one of our affiliate managers.
We do not work with discount and coupon websites. Coupon codes are not provided to affiliates. Affiliates that display invalid discount codes on their websites or in their promotions will be removed from the affiliate program. Any misleading information to set an affiliate cookie on the potential customer's device is forbidden. This includes any campaigns that aim to mislead the potential customer by representing as insert company name.
Self-referrals are forbidden. This means you can not refer yourself, your immediate family, or the company you work for. You will not receive commission on self-referrals.
The affiliate shall act in insert company name interest and in compliance with all relevant and applicable regulations and ethical standards.
5. Commissions and Payments
In this section, we explain what the commission rates are and how the commissions are paid. Keep in mind that payout should always follow after the full refund window of your product. This is to avoid paying out affiliates before a customer refunds the product.
Example:
Commissions are paid to the affiliate for paying customers that were brought to the website with the affiliate link, and subscribed for our services within 90 days. 90 days is the duration of our affiliate cookie left on the potential customer’s device after clicking the affiliate link.
We offer lifetime commission. This means you will receive commission for as long as the referred customer is a paid user.
We pay commission latest on the 15th of each month. This is for commission accumulated the month before. Our minimum threshold is 50 USD. Our payout method is PayPal. It is the affiliate’s responsibility to have an accurate and working PayPal email address updated in their affiliate dashboard.
We also offer wire transfers for commission over a 1000 USD threshold. Please contact our affiliate team at insert affiliate team email to arrange this.
6. Termination of Affiliate Account
Here we specify our rights to change the affiliate program Terms and Conditions. And how payouts are managed when affiliates terminate their contract.
Example:
We may make amendments to the Affiliate Terms and Conditions that do materially adversely affect your benefits under the Program by giving you thirty 30 days’ notice (“Amendment Notice Period”) in advance prior to its effectiveness by displaying the notification in your Affiliate dashboard.
Should you disagree with such an amendment, you may terminate this Agreement within the Amendment Notice Period, effective on its expiry by informing us in writing.
When an affiliate account is terminated by the affiliate, unpaid commission above the minimum threshold of 50 USD will be paid out. Any commissions pending under 50 USD will be voided.
The company may terminate your affiliate Agreement or suspend access to the affiliate program with immediate effect and without prior notice in the circumstances of fraud and abuse.
7. Limitation of Liability
Coming toward the end of your affiliate Agreement, you want to make sure you cover liability. As a company, you want to restrict your liability as much as possible. This section includes information about disclaimers and damages.
Example:
Insert company name provides no warranty or representation regarding the Affiliate Program, its availability, or the accuracy and completeness of the tracking and reporting systems. The Affiliate Program is provided on an "as is" basis.
In no event shall the Company be liable for any indirect, consequential, or special damages arising out of or in connection with the Program, including but not limited to lost profits or loss of business opportunities.
Final Thoughts
This affiliate marketing Terms and Conditions template is meant as a guide. Always consult your legal team to create, review and approve your Agreement. We hope your new affiliate program brings exciting opportunities your way.
