What Is an Affiliate Agreement | The Ultimate Guide for New Brands (+ 13 Key Essentials & Mistakes to Avoid)

Aug 8

What is an affiliate agreement? I am sharing all you need to know about the affiliate agreement, why it’s crucial for new brands and what you need in your affiliate agreement.

Using affiliates to promote your products or services can be a game-changer for your brand, but if you’re anything like me, you want to protect your brand’s reputation and money. As a lawyer myself who drafts affiliate agreements (and sells an affiliate agreement template) for brands like yours, I am giving you the ultimate guide to what is an affiliate agreement.

You will learn about what is an affiliate agreement, why you need it, and what exactly you need in your affiliate agreement template (sometimes called a marketing affiliate agreement), regardless of whether you are using my comprehensive template or a simple affiliate agreement template you found online.

After learning all about what is an affiliate agreement and the essentials you must have in your affiliate agreement template, you will know what you need to fully protect your brand from reputational damage, IP theft and wrongful money claims!

This post is all about what is an affiliate agreement, why every brand needs it and everything you need to protect your brand.

What Is an Affiliate Agreement

What is an affiliate company agreement

So, let’s start by answering your question: What is an affiliate agreement?

An affiliate agreement is a legally binding contract between a brand running an affiliate program for its business and an affiliate, which may be an individual or a company participating in the brand’s affiliate program.

The affiliate agreement states under which terms and conditions the affiliate may use the affiliate program and the affiliate links to promote the brand’s products or services and earn commissions. It is basically a guide on what the affiliate may and may not do and when the affiliate is entitled to a commission when the brand has made a sale through the affiliate’s link.

Now, I know what is an affiliate agreement, but why do I need it for my affiliate program?

If you have an affiliate program for your business, then these are the reasons why you would need an affiliate agreement:

Clarity on how your program works: There are many affiliate programs out there, and some work differently than others. The main commonality is that the affiliate receives a unique affiliate link, and if anyone buys something from you, the affiliate receives a payment. But does that mean that the affiliate receives a commission for sales on all products and services you sell in your online store or only certain items? Does the affiliate receive a fixed fee or a percentage? If you are running a sale, does the affiliate receive a percentage of the original or sale price? You need a clear answer to these and other questions in your affiliate agreement template.
Set the right expectations: The proper affiliate agreement should also specify exactly what you expect from your affiliates, like how they should promote your products and services and, maybe more importantly, what they may not say about your products/services.
Protection from wrongful money claims: A MAJOR reason you need to have an affiliate agreement is to outline exactly when your affiliates are entitled to commission and when not (anymore), so there is no discussion on when your affiliates are entitled to commissions or when they get paid.
Legal protection for non-compliance: Your affiliates must comply with certain (influencer) marketing laws when promoting products or services through affiliate programs. If your affiliates do not comply with those laws, the authorities may fine you and not the affiliate of both of you, while you had nothing to do with it. You want to make sure that if the **** hits the fan, your affiliate is the one who pays, and not you. That is why you have indemnities in your affiliate agreements to protect you against non-compliance by your affiliates.
Protection of your reputation: The proper affiliate agreement should give your affiliates a guideline on how they may and may not represent your brand. And your affiliate agreement should have the right wording, so you can immediately stop your affiliates from doing or saying something that damages your brand’s reputation or (intentionally or unintentionally) gives a misrepresentation of your brand.

These are the main reasons why you need a marketing affiliate agreement.

Essentials for your marketing affiliate agreement

So, now you know what is an affiliate agreement and why you need it.

Let’s get into what essentials you need in your marketing affiliate agreement for your affiliate program:

Eligibility: Your marketing affiliate agreement should state what prerequisites your (potential) affiliates need to meet to join your affiliate program, such as their minimum age and all the personal information provided by your affiliates being true and complete.
Application procedure: Your affiliate agreement should outline how (potential) affiliates may apply for your affiliate program and how your admission process works, including your right to accept or reject applications.
Obligations: Your affiliate agreement should outline the obligations of your affiliates, such as how they may promote your products or services, what they can and can not say about your products/services, and compliance with influencer marketing laws.
Link tracking: Your marketing affiliate agreement should state how your affiliate program software monitors sales through affiliate links and how it tracks customers.
Commissions: In your affiliate agreement template, you need to state what commissions or rewards your affiliates earn and how those commissions are earned or lost, including specifics on the commission rates, payment methods, and frequency of payments.
Intellectual property rights: Your affiliate agreement template should clearly state that your company remains the owner of the intellectual property rights to the promotional and marketing materials that you make available to your affiliates. Your affiliates should only receive a license to use those materials, no ownership.
Termination: Your marketing affiliate agreement should outline the circumstances under which you may terminate or suspend an affiliate’s participation in the affiliate program, like in the event of a breach of your agreement, damage to your brand’s reputation, or non-compliance with applicable (influencer) marketing laws.
Confidentiality: You want your affiliate to keep your business between the two of you and not have them air out confidential information, like how much you pay certain affiliates, especially if not every affiliate receives the same commission.

What is an affiliate agreement without at least these basics?! Learn more about the essentials your marketing affiliate agreement needs in this blog post on the 9 Must-Haves for Your Affiliate Terms and Conditions.

Major Mistakes to Avoid

Now you know what is an affiliate agreement and what essentials your affiliate agreement template needs, let’s get into the mistakes to avoid.

Vague Terms: Ambiguity is your enemy when it comes to contracts. Your affiliate agreement template may contain all the terms you need, but what is it worth if it contains legal jargon that your affiliates don’t understand? All your affiliates, whether they are experienced business owners or young bloggers, should be able to fully understand your affiliate agreement.
Omitting exceptions on entitlement to commissions: Do you want your affiliate to receive a commission when they claim a sale has been made through them but this is not registered through your affiliate program? Do you want to pay your affiliates commissions over sales that have not been completed or charged back? Do you want your affiliates to receive commissions when they have made some sales but have caused major damage to your brand’s reputation? I didn’t think so. These are all examples of exceptions that you need to include in your affiliate agreement.
No disclosure rules: If you fail to include the requirement for your affiliates to disclose their affiliate relationship with you, that can lead to negative reviews, thus, hurting your brand’s reputation or even legal consequences for your brand, as mentioned earlier. I have seen these requirements in most sponsorship agreements, but they are still often missing in affiliate agreements.
No outline of prohibited activities: What I see in any marketing affiliate agreement is the prohibition to perform activities that do not comply with the rules of the affiliate program or that damage a brand’s reputation. However, these terms often do not state exactly what activities are prohibited. You need to be very clear on what specific activities are not allowed and provide examples so it is super clear to your affiliates what you expect them not to do.
Not updating your affiliate agreement: Affiliate marketing practices change all the time. It might be market practice in your niche to pay commissions of 20% now, but it may be more common to pay commissions of 30% a year from now. Maybe new marketing laws will be implemented next year. You must update and review your affiliate agreement whenever you adapt to new trends and requirements.

Your affiliate agreement is the foundation for a successful affiliate program and your brand’s protection. Having an affiliate agreement that includes all the essentials and avoiding common mistakes will maximize your brand’s and your affiliates’ potential for a successful partnership.

Want to learn more about what mistakes to avoid in your affiliate agreement template? Read this blog post on the 5 Major Mistakes to AVOID in Your Affiliate Program Terms and Conditions.

Affiliate agreement template

So, now you have learned everything about what is an affiliate agreement and why you need one for your affiliate program.

I have provided an overview of the essentials you need in your affiliate agreement template and what mistakes to avoid.

Again, to learn more about the essential terms you need in your affiliate agreement template, read this blog post on the 9 Must-Haves for Your Affiliate Terms and Conditions. If you want to know what mistakes to avoid in your affiliate agreement template, read this blog post on the 5 Major Mistakes to AVOID in Your Affiliate Program Terms and Conditions.

If you are looking for an affiliate agreement template that includes all the essentials (to avoid the most common mistakes), I sell a template in my contract shop! My marketing affiliate agreement includes all the fundamentals (and more) for any affiliate program.

My templates are easy to use, fully customizable to your (affiliate program’s) needs and can be used as terms and conditions your affiliate simply has to agree to, so you can contract with your affiliates quickly and smoothly.

You can get your affiliate agreement template on this page of my contract shop!

Using a free simple affiliate agreement template?

Maybe you are not able to purchase a marketing affiliate agreement. If you prefer to grab a simple affiliate agreement template online, you can use my overview to ensure that your template includes all the essentials you need. Since it is probably a one page affiliate agreement template provided for free, it will likely not include everything on this list.

So, make sure you can either add the missing terms to your template or buy one to ensure you have the rights and protections your business needs!

This post was all about what is an affiliate agreement and the essentials you need in your affiliate agreement template.

Do you need an affiliate agreement template for your affiliate program? Then you get the Affiliate Agreement Template on this page of my contract shop!

Now you know what is an affiliate agreement, do you want to learn more about the essentials you need in your affiliate agreement template? Read this blog post on the 9 Must-Haves for Your Affiliate Terms and Conditions.

Want to know what mistakes to avoid in your affiliate agreement template? Read this blog post on the 5 Major Mistakes to AVOID in Your Affiliate Program Terms and Conditions.

Selene Snippe