Why agreements matter
A sales agent agreement is the contract between you and the business whose products you sell. It defines the terms of your relationship: what you sell, how much you earn, when you get paid, and what happens if things go wrong.
Never start selling for a business without a written agreement. Verbal promises are meaningless when there is a dispute about commissions. Get everything in writing.
Key terms to look for
Every sales agent agreement should clearly cover the following:
Commission structure. How much do you earn per sale? Is it a percentage of revenue, a flat fee, or a tiered structure? Is it one off or recurring? This is the most important term in the agreement, so make sure it is crystal clear.
Payment terms. When do you get paid? Weekly, fortnightly, monthly? What triggers a payment: when the customer signs up, when they pay, or after a trial period? Understand the cash flow implications.
Territory or scope. Are you limited to a specific geographic area or industry? Can other agents sell the same product in the same area? Exclusive territory rights can be very valuable.
Duration and termination. How long does the agreement last? Can either party terminate early? What happens to your commissions on existing customers if the agreement ends?
Trailing commissions. If you earn recurring commissions, do they continue after you stop actively selling? For how long? This is a critical term for building long term income.
Red flags to watch for
Be cautious of agreements that:
- Do not specify a payment date or schedule
- Allow the business to change commission rates unilaterally
- Include clawback clauses for customer cancellations beyond 30 days
- Require you to pay for marketing materials or training
- Prevent you from selling competing products entirely
Negotiate before you sign
Most agreements are negotiable. If a term does not work for you, ask for it to be changed. Businesses that refuse to negotiate on reasonable terms are often businesses that do not treat their agents well.
Pay particular attention to what happens to your recurring commissions if the agreement ends. The best agreements allow your trailing commissions to continue for the life of the customer, even after you stop selling.
Platforms simplify this
One advantage of using a platform like Zepys is that the agent agreement terms are standardised and transparent. You can see the commission structure, payment terms, and other conditions before you commit. This removes much of the uncertainty and negotiation that comes with setting up direct relationships with businesses.
When in doubt, get advice
If you are looking at a significant commission opportunity and the agreement is complex, it is worth having a lawyer review it. A few hundred dollars in legal fees can save you thousands in lost commissions down the track.