Updated November 12, 2020:

An independent sales rep agreement is necessary for any business that consists of sales representatives. The sales force is the public face of the company, so it's important that the organizations and individuals that are in charge of marketing the services and products are selected carefully.

The product should be marketed so it reflects the brand and business. In the agreement, it should state the following:

  • What cost products are sold at
  • Which people the products will be sold to
  • Where they can be sold

Small companies benefit from an independent sales representative. There isn't any investment upfront of effort or money since they're paid on commission. They get paid when the company does, and they can both build and grow the business together. A good agreement will list the responsibilities and rights of the company. Verbal agreements can cause ill will and disputes. This is why it's smart for every party to document their role in writing before starting a business. The product is the foundation of the company, and the agreement will entrust it to a trusted representative.

Basics of an Agreement

A sales rep agreement is the legal contract between the company and person who sells the service or product in exchange for compensation. The agreement lists the terms and conditions and recitals when hiring an independent sales representative on the company's behalf. The contract describes the geographic area and role of the sales representative, the payment and commission structure, and the responsibilities and obligations of the parties. The job requirements should be thoroughly read by the representative so they understand what's expected of them. They should fit in with their qualifications and experience.

If the job description isn't clear, the agent or company should be called to get more details. This will make it clear to the representative what the targets are that need to be accomplished, as well as future prospects and incentive pay with the company. The representative can also find out if there's any type of training that's required. This can make a difference in their ability to sell.

It's important to note that small business agreements, contracts, or forms that were received can't replace a lawyer's advice. It's recommended that a lawyer reviews all forms and contracts. There are different laws and circumstances in every state that apply to different business types.

Do's and Don'ts Checklist

A sales representative is considered the company's face. The quality of the product that's sold will affect the representative's reputation. Both parties should think about the responsibilities and roles carefully before they sign the document. Each party can, and should, spend time going over the agreement. This will decrease the chance of a claim where one of the parties didn't understand what the terms were.

The state laws regarding independent contractors should also be reviewed. It's important to look at the state's laws when it comes to independent contractors. It's been more difficult in many states for people to qualify as one, as there are certain requirements about the contractor's freedom that must be in place. Some provisions in the agreement may need to be adapted or strengthened in order to comply with the state's rules.

The document is considered an exclusive sales representative agreement. This means the company can't hire other representatives that sell an identical product. Therefore, this agreement isn't for companies that want more than one representative selling their goods or services. Before signing the agreement, the goals should be decided. Determine if it's enough to protect the company's information and if the commission made is fair with the energy and time that's needed to market the products. Make sure the terms and conditions are clear in the agreement before they're put into written form.

Every party should look over the agreement to make sure that all the important points are included. It's safer to be overinclusive compared to underinclusive. It shouldn't be assumed that the terms or expectations are agreed to unless they're expressed in the agreement. Two copies of the document should be signed so both parties have a copy.

If you need help with an independent sales rep agreement, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.