Creating a Sales Representative Agreement

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

A comprehensive sales representative agreement can be an essential tool for businesses, ensuring that both parties are on the same page and all responsibilities and restrictions of the arrangement are clearly outlined - protecting each party from potential disputes.
At Genie AI, we understand how vital it is to draw up a solid agreement; one which sets out the rights and responsibilities of both parties, as well as any limitations in the contract - allowing a smooth transaction process. A sales representative agreement also offers further advantages, such as protecting confidential information and reducing liability risks.
The agreement should state exactly what information can be shared with the sales representative, safeguarding your business’s competitive edge. Additionally, there should be provisions regarding compensation and conditions of termination included in order to manage the relationship in an orderly manner.
Our free template library provides market-standard legal documents to help you create your own sales representative agreement quickly and easily without needing to pay for a lawyer. By using our analysis of millions of data points, you can draft high-quality legal agreements that accurately reflect consensus around this topic - giving you greater peace of mind about your contract setup.
For more information about how to access our template library today or for a step-by-step guide on creating a comprehensive sales representative agreement with Genie AI – read on below!

Definitions (feel free to skip)

Responsibilities: The tasks and duties that a person is expected to fulfill.
Qualifications: The qualities, skills, and qualifications that a person must possess in order to be eligible for a job or position.
Duties: The tasks and obligations that a person is required to perform in a job or position.
Compensation: Money or other benefits given in exchange for work performed.
Payment Structure: The terms and conditions that determine how and when payments will be made.
Expiration Date: The date on which a contract or agreement will end or become invalid.
Non-Competition Clauses: Clauses in a contract that prevent a person from working for a competitor.
Termination Process: The process for ending a contract or agreement.
Dispute Resolution: The process for resolving conflicts between two or more parties.
Confidentiality: The obligation to keep certain information private or secret.
Non-Disclosure: The obligation to not share certain information with other parties.
Drafting: The process of writing or creating a legal document.

Contents

• Overview of the Role of a Sales Representative
• Define the responsibilities of the Sales Representative
• Describe the required qualifications
• Identify the duties of the Sales Representative
• Clarifying the Responsibilities of Both Parties
• Identify the expectations of the parties
• Specify any additional tasks the Sales Representative may be asked to perform
• Establishing Payment and Compensation Terms
• Determine the compensation rate
• Outline the payment structure
• Establishing the Length of the Agreement
• Negotiate the length of the agreement
• Set expiration date
• Specifying Limitations on Representation
• Identify the products and services that the Sales Representative will represent
• Determine any limitations on the Sales Representative’s representation
• Establishing Non-Competition Provisions
• Negotiate any non-competition clauses
• Explaining the Termination Process
• Describe the reasons for termination
• Outline the procedures for terminating the agreement
• Identifying Dispute Resolution Options
• Determine the process for resolving disputes
• Describe the mediation and arbitration process
• Discussing Confidentiality and Non-Disclosure
• Outline the confidentiality requirements
• Describe any non-disclosure clauses
• Drafting the Agreement
• Create the agreement draft
• Review the agreement draft with both parties
• Make any necessary revisions
• Sign the agreement

Get started

Overview of the Role of a Sales Representative

• Understand the roles and responsibilities of a sales representative
• Research the industry and any regulations that would apply
• Consider how the sales representative will interact with the company, customers, and potential partners
• Determine the expectations of the sales representative and the company
• Determine the sales representative’s compensation structure and other benefits
• When you have a clear understanding of the role of a sales representative, you can move on to the next step of defining their responsibilities.

Define the responsibilities of the Sales Representative

• Understand and adhere to all company policies and procedures
• Maintain a professional demeanor when representing the company
• Develop relationships with current and potential customers
• Keep accurate records of sales activity
• Meet or exceed sales goals
• Develop and implement strategies to increase sales
• Respond to customer inquiries
• Track customer orders and provide customer service

When you are done defining the responsibilities of the Sales Representative, you can check off this step and move on to the next step.

Describe the required qualifications

• Outline the experience and/or qualifications that are necessary for the Sales Representative to be successful in this role
• Include any relevant qualifications, certifications, or licenses that the Sales Representative must hold
• Identify any special skills that would be beneficial for the Sales Representative to possess
• Specify any language requirements the Sales Representative should have
• When you have outlined all necessary qualifications, you can move on to the next step.

Identify the duties of the Sales Representative

• Identify the scope of the Sales Representative’s duties and responsibilities
• Determine what tasks the Sales Representative will be held accountable for
• List the tasks that the Sales Representative will be expected to complete
• Specify the Sales Representative’s reporting requirements

You will know when you can check this off your list when you have identified the scope of the Sales Representative’s duties and responsibilities, determined what tasks the Sales Representative will be held accountable for, listed the tasks that the Sales Representative will be expected to complete, and specified the Sales Representative’s reporting requirements.

Clarifying the Responsibilities of Both Parties

• Identify any duties of the Sales Representative that are in addition to the duties identified in the previous step
• Specify how any delegated duties will be managed
• Outline any ongoing responsibilities of the Sales Representative
• Define how the Sales Representative will be compensated for their services
• Establish a timeline for the Sales Representative to adhere to
• Once you have clarified the responsibilities of both parties, you can move on to the next step of Identifying the expectations of the parties.

Identify the expectations of the parties

• Determine and define the expectations each party has of the other
• Outline what the customer expects from the sales representative, such as the services they will provide, how they will be compensated, and what the customer expects in terms of results
• Outline what the sales representative expects from the customer, such as any necessary resources, access to the customer’s customer base, and customer support
• Consider the length of the agreement and any potential changes in the future
• Document the expectations in the agreement

When you can check this off your list and move on to the next step:

• Once all expectations of each party have been identified and documented in the agreement, this step is complete.

Specify any additional tasks the Sales Representative may be asked to perform

• Brainstorm any tasks that you may want the Sales Representative to perform that are not included in their general duties
• Make a list of these tasks and include them in the agreement
• Be sure to include details about the scope and expectations for each task, and any compensation associated with them
• When you have a full list of additional tasks, include it in the agreement
• You’ll know you can check this step off when you have a completed list of additional tasks included in the agreement.

Establishing Payment and Compensation Terms

• Identify the sales representative’s base salary and any bonuses or commissions
• Specify payment terms, such as when and how payments will be made
• Create a budget for any additional expenses the sales representative may incur
• Outline any reimbursement policies for any additional expenses
• Include any additional benefits the representative may receive
• Determine the termination conditions for the agreement
• Draft a formal agreement outlining all of the above-mentioned points
• Have both parties sign the agreement

How you’ll know when you can check this off your list and move on to the next step:
Once both parties have signed the agreement, you can move on to the next step, which is determining the compensation rate.

Determine the compensation rate

• Discuss the hourly rate or salary amount with the sales representative to ensure that both parties are in agreement
• Verify the payment terms of the agreement and make sure that the sales representative is clear on when and how he/she will be paid
• Have the sales representative sign and date the agreement to confirm the compensation rate
• Check off this step from the guide and move on to outlining the payment structure

Outline the payment structure

• Consider the following when outlining the payment structure:
• Type of compensation (hourly, salary, commission, etc.)
• Payment schedule
• Payment method
• Include the payment structure in the agreement.
• When you have outlined the payment structure, check it off your list and move on to the next step: Establishing the Length of the Agreement.

Establishing the Length of the Agreement

• Identify the length of the agreement: Determine how long the agreement will last. This could be an open-ended agreement or a specific timeframe.
• Negotiate the length of the agreement: Discuss with both parties the desired length of the agreement. If there is a discrepancy, reach a mutually beneficial agreement.
• Document the length of the agreement: Once both parties have agreed on the length of the agreement, include it in the draft of the agreement.
• Verify the length of the agreement: Double-check the document to make sure the length of the agreement is clearly stated.

Once you have identified, negotiated, documented, and verified the length of the agreement, you can move on to the next step of the guide.

Negotiate the length of the agreement

• Consider the sales representative’s needs and preferences when negotiating the length of the agreement
• Discuss the length of the agreement so that adequate time is given to the sales representative to complete their duties
• Determine the date when the agreement will end and when the sales representative will receive their commission
• Agree on a renewal or termination clause in the agreement to ensure that the sales representative and company are both protected
• Once you have come to an agreement on the length of the agreement, you can check this off your list and move on to the next step of setting an expiration date.

Set expiration date

• Determine the desired term length for the agreement, taking into account the length of the sales cycle and the expected duration of the relationship
• Agree upon a date on which the agreement will expire; this should be a date certain, and not an indefinite period such as “one year from the date of signing”
• Make sure that the expiration date is clearly stated in the written agreement
• Once the expiration date is set and included in the agreement, you can check this step off your list and move on to the next step.

Specifying Limitations on Representation

• List any limits or restrictions the Sales Representative should be aware of.
• These could include restrictions such as geographic limitations or limitations on the types of sales the Sales Representative is allowed to make.
• Make sure to include any and all restrictions in the agreement.
• Once all restrictions and limitations have been specified and agreed upon by both parties, this step can be marked off and you can proceed to the next step.

Identify the products and services that the Sales Representative will represent

• List out all the products and services that you want the Sales Representative to represent
• Make sure to include all relevant details, such as product names, product categories, and the scope of services
• Have the Sales Representative agree to this list of products and services in writing
• Once both parties have agreed to the list of products and services, you can move on to the next step of determining any limitations on the Sales Representative’s representation

Determine any limitations on the Sales Representative’s representation

• Consider if the Sales Representative will represent the company exclusively or if they will represent other companies
• Think about whether there are any geographic restrictions on the Sales Representative’s representation
• Decide if there are any limitations on the types of goods and services that the Sales Representative can represent
• Determine if the Sales Representative will represent the company at industry events or tradeshows

Once you have established the limitations of the Sales Representative’s representation, you can move on to the next step of establishing non-competition provisions.

Establishing Non-Competition Provisions

• Identify the terms of the non-competition agreement, including any geographic limitations, types of customers, and time limitations
• Draft language that outlines the limitations on the Sales Representative’s activities
• Discuss the provision with the Sales Representative and negotiate any changes
• Finalize the language and document the agreement in the Sales Representative Agreement
• Once the agreement has been finalized, the non-competition provisions are established and you can move on to the next step in the process.

Negotiate any non-competition clauses

• Have an open discussion about the type of non-competition clauses you want to include in the agreement.
• Brainstorm creative solutions that work for both the customer and the sales rep.
• Agree on the specific terms of the non-competition clauses and make sure they are clearly written in the agreement.
• Make sure both parties are happy with the terms before signing the agreement.
• Once the negotiation process is complete, you can move on to the next step.

Explaining the Termination Process

• Negotiate the terms of the termination process, including how and when the Sales Representative Agreement will be terminated by either party, and agree on any applicable conditions.
• Discuss the reasons for termination and any associated costs or damages.
• Specify the notice period that must be given prior to termination, and when the termination process will be considered effective.
• Include any applicable restrictions on the Sales Representative’s ability to solicit or accept business from the Company’s clients after the termination of the agreement.
• Determine if there are any legal requirements, such as certain laws which may impact the termination process.
• Agree on the procedures for the return of any materials or equipment belonging to the Company.

Once you have negotiated and agreed upon the terms of the termination process, you can move on to the next step of describing the reasons for termination.

Describe the reasons for termination

• Define the circumstances that constitute a breach of the agreement and how it will be addressed
• Outline any other reasons for termination, such as failure to make payments, that are agreed upon by both parties
• Specify how the termination process will be initiated and how each party will be notified of the termination
• Include any other reasons for termination that both parties agree upon
• Check that all reasons for termination are clearly listed and understand by both parties

Once you have listed all the reasons for termination and both parties have agreed to them, you can check this off your list and move on to the next step.

Outline the procedures for terminating the agreement

• Identify the conditions that would warrant a termination of the agreement by both parties
• Create an exit strategy that outlines the procedures for terminating the agreement
• Discuss the notice period that needs to be given to the other party if either party wants to terminate the agreement
• Describe the consequences of terminating the agreement early
• Specify the legal process that will take place in the event of a termination
• Outline the procedures for transferring the rights and obligations of the agreement in the event of termination

When you have identified the conditions and created the exit strategy for terminating the agreement, you can check this off your list and move on to the next step, which is identifying dispute resolution options.

Identifying Dispute Resolution Options

• Research applicable state laws for arbitration, mediation, and litigation
• Consult with a local attorney to discuss the best options for dispute resolution
• Include a clause in the agreement that outlines the dispute resolution process
• Make sure to include a clause that states which laws will govern the dispute resolution
• Check for any additional requirements for dispute resolution in the state or country

Once you have determined the dispute resolution process and included the relevant clauses in the agreement, you can check this step off your list and move on to the next step.

Determine the process for resolving disputes

• Consult a lawyer to ensure that the dispute resolution process is legally binding and meets the standards set forth by your state or country
• Decide if you want to use mediation or arbitration as the primary form of dispute resolution, or if you want to combine the two
• Decide which party will bear the cost of mediation or arbitration
• Include the dispute resolution clause in the agreement

Once you have consulted a lawyer, decided on a form of dispute resolution, and included the clause in the agreement, you can check this step off your list and move on to the next step.

Describe the mediation and arbitration process

• Research the applicable laws and regulations for the area that the agreement covers to ensure that the mediation and arbitration process is compliant
• Make sure to clearly define the process for mediation and arbitration in the agreement, including timelines, costs, and rules of procedure
• Consider using a private arbitration provider to ensure a fair and impartial process
• Ensure both parties understand their rights and responsibilities under the agreement

Once you have defined the mediation and arbitration process in the agreement, you can check this step off your list and move on to discussing confidentiality and non-disclosure.

Discussing Confidentiality and Non-Disclosure

• Agree upon confidentiality and non-disclosure requirements in the agreement.
• Include a clause that the sales representative will not disclose any confidential information about the company’s products, services, and processes to any third party.
• Include a clause that outlines the consequences of violating any of the confidentiality and non-disclosure agreement.
• Determine the length of time that the non-disclosure agreement will remain in effect.
• Include a clause that states that the sales representative must return all confidential information to the company upon termination of the agreement.

Once these points have been discussed and agreed upon, you can check this off your list and move on to the next step.

Outline the confidentiality requirements

• Review any existing documents that define confidentiality requirements
• Create a list of information that should be kept confidential
• Develop a clear definition of confidential information
• Outline any exceptions to the confidentiality requirements
• Include a timeline for when the confidentiality requirements will be in effect
• Describe the consequences if any confidential information is disclosed
• Have the sales representative sign the document to confirm they understand the confidentiality requirements

Once the confidentiality requirements are outlined, then the document can be checked off the list and the next step, which is to describe any non-disclosure clauses, can be completed.

Describe any non-disclosure clauses

• Review the terms and conditions of the agreement to determine if a non-disclosure clause is needed
• Create an appropriate clause that protects the interests of both parties
• Clearly state the confidential information that is subject to the non-disclosure clause
• Describe the duration of the non-disclosure clause
• Outline the consequences of breaking the non-disclosure clause
• Ensure that both parties have signed and dated the agreement

When you can check this off your list:

• Once you have reviewed the terms, created an appropriate clause, and outlined the consequences of breaking the non-disclosure clause, you can move on to the next step.

Drafting the Agreement

• Collect information from both parties to be included in the agreement, such as job responsibilities and payment terms
• Put the agreement together, including the legal information, payment terms and duration of the agreement
• Verify that all of the details included in the agreement are accurate and agreed to by both parties
• Check for any potential legal issues and make any necessary revisions
• Once the agreement is finalized, have it reviewed by a legal professional for accuracy
• When the agreement is finalized, both parties should sign and date the document
• After both parties have signed, the agreement is legally binding and can be used in court if necessary.

You’ll know you can check this off your list and move on to the next step when the agreement has been finalized, reviewed and approved by both parties and a legal professional.

Create the agreement draft

• Gather all relevant information from both parties, such as contact information, terms of agreement, and payment details
• Outline the rights, responsibilities, and obligations of the sales representative
• Draft a legally binding agreement that outlines all details of the agreement
• Include a clause that states the agreement will be governed by the laws of the state or country where the contract is executed
• Ensure all parties sign the agreement, including witnesses if legally required
• When all parties have signed the agreement, you can move on to the next step.

Review the agreement draft with both parties

• Read through the draft agreement to make sure it accurately reflects what has been discussed and agreed upon
• Make sure both parties understand the contents of the agreement
• Ask any questions that may arise from the agreement
• Make sure all parties involved sign the agreement once it’s been reviewed and approved
• Confirm that both parties are in agreement with the contents of the agreement
• When all parties have signed the agreement, it is complete and can be checked off the list and the next step can be completed.

Make any necessary revisions

• Read through the agreement draft and discuss any changes that need to be made with both parties
• Make the necessary revisions to the agreement draft
• Once both parties agree on the revisions, the agreement is ready to sign
• Check off this step when all revisions have been made and agreed to by both parties.

Sign the agreement

• Have both parties sign and date the agreement
• Obtain a copy of the agreement for both parties
• Ensure both parties have received a copy of the agreement
• Once both parties have signed the agreement, it is considered legally binding and both parties are obligated to fulfill their respective responsibilities outlined in the agreement
• Check this off your to-do list when both parties have signed and received a copy of the agreement.

FAQ:

Q: What does a Sales Representative Agreement typically include?

Asked by Blake on April 12, 2022.
A: A Sales Representative Agreement is a legally binding contract between a company and a sales representative. It outlines the terms of the relationship between the two parties, including the sales representative’s responsibilities, compensation and other important aspects. Commonly included in a Sales Representative Agreement are:
-A description of the services to be provided by the sales representative,
-The duration of the agreement
-Payment terms and commission rates
-Territorial restrictions,
-Confidentiality provisions and
-Non-compete clauses.

It is important to ensure that all elements in the agreement are clear and leave no room for ambiguity or misunderstanding. This is especially true if you are dealing with multiple jurisdictions (e.g. UK, USA or EU). It is also vital to make sure that you are familiar with any local laws that may apply to your particular sector or business model (e.g. SaaS, Technology or B2B).

Q: What should I consider when creating a Sales Representative Agreement?

Asked by Ella on August 15, 2022.
A: When creating a Sales Representative Agreement, it is important to consider all aspects that could affect the agreement. Firstly, you should consider any applicable laws in the relevant jurisdiction (e.g. UK, USA or EU). This includes any local laws which may apply to your particular sector or business model (e.g. SaaS, Technology or B2B). Secondly, you should ensure that all elements in the agreement are clear and leave no room for ambiguity or misunderstanding. Thirdly, you should consider your specific needs and determine whether a Sales Representative Agreement is necessary for your business. Finally, you should ensure that both parties have read and understood the agreement before signing it to avoid potential disputes in the future.

Q: What happens if either party breaches a Sales Representative Agreement?

Asked by Joshua on May 25, 2022.
A: If either party breaches their obligations under a Sales Representative Agreement, this could lead to legal action being taken against them by the other party depending on the severity of the breach and the jurisdiction in which it occurred. Usually, this will start with a warning letter from one party to another requesting that they comply with their obligations under the agreement; if this does not resolve matters then further legal action may be taken including seeking compensation for losses suffered as a result of breach of contract. If it is determined that one party has breached their obligations under the agreement then they may also be liable for damages resulting from their breach. The remedies available can vary depending on local laws and/or international treaties applicable in each particular jurisdiction (e.g UK, USA or EU).

Example dispute

Suing a Company for Breach of a Sales Representative Agreement

• The plaintiff may have a valid claim if they can prove that the company has breached the terms of the Sales Representative Agreement.
• The agreement should be reviewed to determine which duties and responsibilities the company agreed to and whether they have been fulfilled.
• The plaintiff should be able to prove that the breach of the agreement has caused them damage.
• The plaintiff may be entitled to damages for lost profits or other economic losses incurred as a result of the breach.
• If the company failed to fulfill its obligations under the agreement, the plaintiff may be awarded punitive damages in addition to compensatory damages.
• The court may also award the plaintiff attorney’s fees and other costs associated with bringing the lawsuit.
• In order to win the case, the plaintiff must demonstrate that the company breached a material provision of the Sales Representative Agreement, which caused them damage.

Templates available (free to use)

Exclusive Sales Representative Agreement
Sales Representative Agreement

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