Finder's Fee Agreement Template
What Is a Finder's Fee Agreement?
A Finder's Fee Agreement is a typed or handwritten document that outlines the relationship between a business and an outside source along with the compensation for the facilitation of a transaction. A finder's fee is paid to the individual or company that spotted the possibility of a deal and introduced their client to the new business partner or customer. It serves as a financial incentive that motivates the finder to keep searching for new referrals for their clients.
Draft a Finder's Fee Contract in the following circumstances:
- Your entity is looking for potential investors and is connected to them by a common business partner.
- Your business chooses to sell assets and is referred to a prospective buyer by an acquaintance.
- Your company seeks a new employee for a particular project and hires an individual recommended by a former or current employee of the company.
You can download a Finder's Fee Agreement template below or make a more personalized document using our online form builder.
How to Make a Referral Agreement?
It is highly recommended to complete an agreement when looking for referrals - even if the company and finder have worked together for a long time and are willing to provide and accept a favor as a gift, you should still reflect your business relationship in written form. Follow these steps to compose a business Referral Fee Agreement:
- State the names of the parties - customer and finder.
- Describe the purpose of the contract. It is required to clearly indicate what kind of referral the finder should be providing - new clients, service providers, suppliers, etc. Outline what kind of referral you are paying for - a simple meeting with a potential new customer or a concluded transaction.
- Term of the agreement. Write down the effective date of the agreement and its period of retention.
- Finder's fee. You are free to negotiate the Finder's Fee Agreement percentage but usually, it is calculated on a pro-rata basis and is 10% of the eventual transaction consideration. Add the payment conditions - you need to choose a method of payment before you sign the papers. Under special circumstances, the finder may waive their right to receive any kind of compensation for their intermediary services, but traditionally, a fee is the best way to reward someone who introduced you to new business opportunities.
- Exclusivity clause. Generally, these agreements are non-exclusive - both parties reserve a right to enter into similar contracts with other parties.
- Confidentiality clause. Sometimes referral entails sharing industry knowledge and trade secrets, and it is up to the customer to protect themselves from disclosing these details from their competitors who may want to gain a competitive edge.
- Termination clause. It is allowed to cancel the contract at any time, even without explaining a cause. Either party can terminate the agreement by giving written notice to its counterpart.
- Signatures of the parties and the actual date of signing.
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