What is a sales agency agreement?
It is a legally binding agreement between a client and a sales agency tasked to convert sales for the client. It ensures that both parties are protected and has set proper expectations.
What does a sales agency agreement include?
A sales agency agreement should include the following: definition of parties involved and defined rights and obligations for both parties. It may also include miscellaneous provisions if needed.
Are there free sales agency agreement templates?
With Bonsai, you can create your sales agency agreement in minutes. Just sign up, download and edit their free template. Our agreements are legally reviewed and approved by attorneys.
As a sales agent, you will eventually have to present a sales agency agreement to your clients from time to time as you intend to make the sales on their behalf. In fact, you cannot act as a salesperson for a vendor unless the vendor authorizes you through a mutually binding sales agreement.
Freelancers must ensure the documentation of commercial terms and conditions relating to the expectations of the client. The agency agreement must address obligations for both parties to ensure satisfaction upon completion of the project. Regardless of the client's relationship with the freelancer, there shouldn’t be a case where the sales agency agreement relies on oral negotiations. The documentation will act as proof in the future in case the client or freelancers has lost any terms or disagrees with the legal action related to the contract. As such, the commercial terms must be enforced in a written form and implemented accordingly.
The fact of the matter is that business relationships aren’t always smooth. Therefore, before you engage your client and agree to promote their products (as a sales agent), you need a contract that will govern the business relationship. This should be the case regardless of your business history with the client. Whether you opt to go for templates downloaded or purchased from the internet, or decide to have one drafted from scratch; there are essential clauses that should not miss from the document.
In case the freelancers are not aware of the possible clauses to be included in the agreement, research on any piece of legislation could be highly significant to protect them from possible consequences revolving around violation of any terms in the agreement. However, the freelancers should ensure the hiring agency defines all the requirements and they can fully comply, possibly after acquiring appropriate training. Legal advice could also be helpful to freelancers who work independently. Consulting professionals is a suitable technique that will help freelancers to fully understand the significant clauses in the sales agency agreement template.
The following are essential clauses freelancers should understand before accepting a sales agency agreement.
1. Define your relationship in the sales agency agreement template
Before you proceed to any other business, the contract should specify the business relationship. Thus, as a sales agent, the sales agency agreement sample should not fail to determine that you are an independent contractor. As an independent contractor, you will have the room to define and maintain the means that the work is done – something employees cannot do. Also, the client will not withhold or pay taxes on payment to you. You will handle all of your tax obligations.
Even though the sales agency agreement is essential to the client, freelancers should consider their situations as well. Sometimes, the commercial terms defined in the contract might be complicated for the freelancer to comply with. As such, the freelancer should ask for room to negotiate any sought of aspect that may appear unappealing to them regarding the contract. They should also ask for detailed views on matters that are not addressed in the agreement. On the other hand, freelancers should consider the past deals and ensure they understand what is required in the current contract to avoid further misunderstanding might the agency fail to comply with specified terms.
2. The scope of work and responsibilities in the sales agency agreement template
The sales agency agreement must mention the duties and responsibilities of each party. Therefore, you must define the tasks you will handle and your responsibilities. These duties and responsibilities include:
- You will represent the client's company in good light by conducting yourself favorably.
- You will use your best efforts to sell the goods. You may also need to mention the channels you will use to promote and sell the products.
- You will engage adequately trained personnel.
- You will not change the terms of sale, prices or brand names.
- You may be required not to promote products that compete with your client's products.
- You will not collect payment or collect debts.
These points are not exhaustive, but they give a scope of how the work will be conducted, and which boundaries you will not cross as the sales agent. There are tasks that only the client should handle, like payment and debt collection. The scope of the contract should always be clearly defined.
As a freelancer, keep in mind that the sales agreement should be client-oriented. Therefore, the responsibilities highlighted should be based on the expectations of the hiring agency. Ensure you list specific tasks that will demonstrate your competitive skills in the current marketplace. You should ensure the responsibilities are compatible with the latest trends applicable in the industry. While listing the scope of work to handle, ensure relevance to the products and services listed by the hiring agency as well as the delivery costs and other terms and conditions of the contract. Lastly, the freelancer should not, under any circumstance, give biased information regarding the responsibilities for the sake of their benefits.
3. The products to be promoted in the sales agency agreement template
Your client may have a variety of products that they sell, and thus, you will need to define which products you will promote as the sales agent. For example, a real estate agent may sell the house but not the furniture contained in the house. Your client may wish to limit the number of products you will promote on their behalf and thus, a list specifying these products will be included.
It is possible for the client to impose limitations on where the products will be sold or the particular type of customers. Your client will provide a comprehensive list of the products they need you to promote, and this list will be included in the products specification clause within the sales agency agreement sample.
Freelancers are supposed to understand the best approach to deal with the assigned products and services. Sometimes, the agency may give products that are unlikely to acquire desired expectations due to the defined government laws and regulations. In such a situation, the freelancer should ask for guidance from the client to ensure they don’t suffer penalties associated with failure to achieve the speculated goals. The list of products provided should, therefore, be reasonable and most likely to obtain competitive advantage from rivals in the industry.
4. Commissions to be earned in the sales agency agreement template
As a sales agent, you cannot sign a sales agency agreement that doesn't include specifics on your earnings. The contract should specify how the commissions to be earned and computed. The document will address the basis of the commissions. Besides commissions, the contract will also specify if there will be bonuses or other incentives that will be earned besides the commission.
Besides specifying the commissions, the sales agency agreement sample will also touch on the schedule that will be followed for payments. You can agree to receive compensation right after the products are shipped to the customers, or you can opt to have it remitted on a periodic basis (for example, on a monthly basis).
Freelancers should understand they are not hammered to late payments or any inappropriate payment schedules. Such can affect business relationships as well as the agency reputation in the industry. The moment a freelancer approaches the contract, there should be an outlined payment agreements that should not be breached. The freelancer should also agree on the terms that may lead to termination of payment, which should also be defined in the business laws and regulations. Thus, a positive business relationship will be achieved and keeping the contract successful.
The sales agency agreement is the document that will cement the business relationship with your client. The document clearly defines how you would work, and how you will be compensated. It also allows you to work independently since you will enter into the contract as an independent sales agent and not as an employee. This gives you the freedom to exercise your skills without being monitored, as the contract defines how far the client will go concerning watching what your business. This document is not merely a paper with words printed on it – it is the binding factor between you and your client.