Handshake referral deals fail at the same three points: whether the introduction counts, how much it was supposed to be worth, and whether the fee is still owed a year later. A one-page referral agreement answers all three before the first introduction is made.
This template defines registered referrals, the credit window, the fee and its base, payment timing tied to collected revenue, and the exclusions, so both sides know exactly which deals pay and which do not.
Registration: the clause that prevents every dispute
"I introduced you to them years ago" is not a payable event. The agreement makes credit turn on a registration: a written introduction naming the prospect before the company's first substantive contact, or first contact through an assigned code or link. Registration produces three certainties: a timestamp (which resolves competing referrer claims by first-in-time priority), a defined prospect, and a defined deadline, because the credit window runs from registration. Deals closed after the window, or with prospects already in the company's pipeline, simply do not pay, and both sides knew it going in.
Designing the fee: base, duration, and timing
Flat fees suit one-time purchases; percentage fees suit recurring revenue, and then two boundaries matter. First, the base: a percentage of collected net revenue, not of signed contract value, so the company never pays fees on money it never received. Second, the duration: an uncapped percentage of a subscription customer's payments is a perpetual annuity, which most companies do not intend, so cap it (first 12 months of revenue is the common convention). Payment timing completes the design: paying within 30 days after the month of collection keeps a natural buffer for refunds.
Some industries regulate referral fees
Referral fees are restricted or prohibited in several fields: real estate settlement services under RESPA, healthcare under the Anti-Kickback Statute, legal services under attorney ethics rules, and securities under licensing regimes. This self-help template is for ordinary commercial referrals; regulated industries need advice specific to their rules.
Referral vs. affiliate vs. commission
Three payment-for-sales structures, three documents. The referral agreement compensates named, individual introductions, typically B2B, with no public promotion. An affiliate agreement compensates public promotion at scale through tracked links, with FTC disclosure duties. A commission agreement compensates a salesperson, employee or contractor, who actively sells on the company's behalf. The referrer's defining trait is passivity after the introduction: they open the door and step aside, which is why the conduct clause strips them of any authority to negotiate or bind the company.
Disclose the relationship to the prospect
A referral presented as a neutral recommendation while money changes hands can mislead the prospect and, in consumer contexts, violate FTC endorsement principles. The conduct clause requires disclosure where a reasonable person would expect it; in B2B introductions, a simple "I have a referral arrangement with them" suffices.
Frequently asked questions
When is a referral fee actually earned?
Whenever the agreement says. This template offers two triggers: when the referred customer signs, or, safer for the company, as revenue is actually collected. The credit window adds the other condition: the customer must close within the stated number of days after the registered introduction.
What happens if two people claim the same referral?
First-in-time registration wins. Because credit requires a written, timestamped introduction or a tracked code, the earlier registration controls and the later one earns nothing for that prospect. This is precisely the dispute the registration mechanism exists to prevent.
Do referral fees continue after the agreement ends?
For referrals registered before termination, yes: the fees continue to accrue and be paid on the agreed schedule. Termination only stops new registrations. This protects referrers from being terminated right before a large introduction closes.
Are referral fees legal in every industry?
No. Real estate settlement services, healthcare, legal services, and securities all restrict or prohibit paying for referrals under federal statutes or professional rules. For ordinary commercial services and products, referral fees are lawful; if your field is regulated, check the specific regime before signing.
Is the referrer an employee or agent of the company?
Neither. The agreement states the referrer is an independent contractor with no authority to negotiate, discount, or bind the company; all terms are set directly between the company and the customer. The company issues a 1099-NEC for fees of $600 or more in a year.
Should the referral arrangement be exclusive?
Usually not. Non-exclusivity lets the company accept referrals from anyone and lets the referrer work with multiple companies. Exclusivity makes sense only in structured partnerships with volume commitments, and then it belongs in a negotiated addendum, not a standard referral agreement.