Create Your Sales Agency Agreement

Protect your business interests with a professionally crafted sales agency agreement that defines clear terms, establishes commission structures, and sets precise territorial boundaries.

Sales Agency Agreement Template

A Sales Agency Agreement is a legally binding contract between a company (principal) and a sales agent that establishes the terms under which the agent will sell the company's products or services. This agreement is crucial for defining commission structures, sales territories, and mutual obligations.

What This Template Is For

This template provides a structured framework for companies looking to engage sales agents or agencies. It clearly outlines the scope of authority, commission terms, and performance expectations. The agreement protects both parties by establishing clear boundaries and responsibilities while ensuring compliance with relevant laws and regulations.

When To Use This Template

Use this template when:

  • Appointing an exclusive or non-exclusive sales agent
  • Expanding your sales reach into new territories
  • Establishing a commission-based sales relationship
  • Defining specific sales targets and quotas
  • Setting up a formal sales representation arrangement

How To Customize It

Follow these steps to customize your agreement:

  1. Define the scope of authority and territory
  2. Specify commission rates and payment terms
  3. Set clear sales targets and reporting requirements
  4. Outline product pricing and discount authorities
  5. Include specific termination conditions
  6. Add confidentiality and non-compete clauses as needed

Common Use Cases

This agreement is commonly used in:

  • Manufacturing companies appointing regional sales representatives
  • Software companies establishing reseller networks
  • International businesses expanding into new markets
  • Service providers working with independent sales agents

Best Practices

Follow these guidelines for an effective agreement:

  • Clearly define geographic territories and market segments
  • Include detailed commission calculation methods
  • Specify minimum performance requirements
  • Outline reporting and documentation requirements
  • Address intellectual property rights

Template Variations

Consider these variations based on your needs:

  • Exclusive Territory Agreement
  • International Sales Agency Agreement
  • Commission-Only Sales Agreement
  • Multi-Product Sales Agency Agreement

Success Stories

Companies have successfully used this template to:

  • Expand into new markets while maintaining brand control
  • Establish clear performance metrics for sales agents
  • Reduce disputes over commission payments
  • Scale sales operations efficiently

Frequently Asked Questions

What should the commission structure include?

The commission structure should clearly define the percentage rate, calculation basis, payment timing, and any conditions affecting commission eligibility.

Can I modify the territory definitions later?

Yes, but it should be done through a formal amendment to the agreement, signed by both parties.

How are sales targets typically determined?

Sales targets are usually set based on market potential, historical data, and mutual agreement between the principal and agent.

What termination notice period is standard?

Standard notice periods typically range from 30 to 90 days, depending on the relationship's complexity and market conditions.

Are non-compete clauses enforceable?

Enforceability varies by jurisdiction but generally requires reasonable limitations in terms of duration, geography, and scope.