If you`re in business, there may come a time when you need to make a referral to another company or individual. Whether it`s for a service you don`t provide or a product you don`t carry, making a referral can benefit both you and the business you`re referring.
But how do you ensure that you`re properly compensated for making a referral? That`s where a referral agreement comes in.
A referral agreement is a legal document that outlines the terms of a referral, including compensation and other important details. Here`s what you need to know about creating a referral agreement for your business.
1. Clearly define the referral terms
The first step in creating a referral agreement is to define the terms of the referral. This includes the specific product or service being referred, the business or individual being referred, and any other necessary details.
2. Determine compensation
The next step is to determine the compensation for the referral. This may be a percentage of the sale or a flat fee. Be sure to clearly state the compensation in the referral agreement.
3. Include non-disclosure and non-compete clauses
To protect both parties, it`s important to include non-disclosure and non-compete clauses in the referral agreement. These clauses prevent the business being referred from sharing confidential information or competing with your business.
4. Decide on exclusivity
Will you have exclusive rights to referring the business or individual, or will they be free to accept referrals from others? This should be clearly stated in the referral agreement.
5. Have it reviewed by a legal professional
Once your referral agreement is drafted, it`s important to have it reviewed by a legal professional. This ensures that the agreement is legally binding and protects both parties.
In conclusion, a referral agreement is a crucial document for any business that makes referrals. By defining the terms of the referral and ensuring proper compensation, you can protect your business and build valuable partnerships with others in your industry.