Read Everything Before You Sign
This sounds obvious, but many agents sign contracts without fully understanding the terms. Every clause matters. Commission rates, payment schedules, exclusivity requirements, termination conditions, and clawback provisions all directly affect your income and flexibility. If you do not understand something, ask or get legal advice before signing.
Commission Structure Details
Beyond the headline rate, understand the fine print. What qualifies as a commissionable sale? Are there minimum thresholds? When exactly is commission earned, at sale or at payment? Are there caps on earnings? What happens to commissions on deals in progress if the contract ends? These details can mean thousands of dollars.
Territory and Exclusivity
If you are given an exclusive territory, make sure the boundaries are clearly defined. What happens if a client in your territory contacts the company directly? What if the company's online sales capture leads in your area? Conversely, if you are asked for exclusivity (only selling their product), ensure the commission and support justify that restriction.
Termination Clauses
How can the contract be ended? What notice period is required? What happens to pipeline deals and pending commissions when the contract terminates? A contract that allows the company to terminate with 7 days notice while you must give 90 days is not balanced. Push for reasonable, mutual terms.
Clawback Provisions
Many contracts include clawback clauses that require you to return commissions if a client cancels within a certain period. Understand these terms clearly. A 90 day clawback is reasonable. A 12 month clawback exposes you to significant risk, especially for products with naturally high churn.
Intellectual Property and Client Ownership
Who owns the client relationships you build? If you leave, can you continue servicing those clients through another arrangement? Some contracts claim ownership of all client relationships developed during the term. Negotiate this carefully because your client book is one of your most valuable assets.
Non Compete Restrictions
Some contracts include non compete clauses that restrict your ability to sell competing products during and after the term. Understand the scope and duration. A narrow non compete for the contract duration is reasonable. A broad non compete lasting two years after termination could severely limit your earning ability.
Get Professional Advice
For significant contracts, invest in a lawyer who understands sales agent agreements. A few hundred dollars in legal fees can save you thousands in unfavourable terms. Platforms like Zepys standardise many of these terms, providing transparency that protects both agents and companies.