As an online business owner, creating an affiliate marketing program for your business or brand can be one of the smartest ways to increase your reach (and your revenue) without adding more to your to-do list.
Whether you’re selling digital products, courses, or physical goods, letting others promote your offers for a commission can help you tap into new audiences that you may have never had the chance to get in front of.
But just like everything in the business world, you want to make sure you launch (or relaunch) your affiliate marketing program the right way – or should I say the legal way.
Because while affiliate marketing is absolutely legal (more on that topic in a minute!), it’s also heavily regulated and if you’re running an affiliate program without clear terms in place, you could be setting yourself up for headaches, disputes, or even compliance issues down the road.
So if you’re gearing up for Q4 promo season for your business and you plan on leveraging affiliate marketing, keep reading to make sure you have everything in place to keep yourself, your business, and your affiliates legally protected along the way.
Is Affiliate Marketing Legal?
First things first, let’s talk about affiliate marketing being a legit and legal operation. It’s common for people to wonder about this because affiliate marketing sometimes gets a bad reputation online.
You might see people promoting products nonstop or making big income claims, which can make it seem “scammy.” But when done correctly and ethically, affiliate marketing is simply a form of referral marketing, meaning that businesses reward you for driving sales or leads through your unique link.
It’s also important to note that affiliate marketing is not the same as a pyramid scheme. In a pyramid scheme, participants earn money primarily by recruiting others into the program rather than selling an actual product or service.
Legitimate affiliate marketing, on the other hand, is a performance-based partnership: someone promotes your product or service using a special tracking link, and you pay them a commission when a sale is made through that link.
What can make affiliate marketing illegal or non-compliant, however, is failing to follow FTC disclosure guidelines.
The Federal Trade Commission (FTC) requires affiliates to clearly disclose when they’re promoting something they’ll earn a commission from and there’s a good chance you’ve seen this in captions or blog posts that say something like:
“This post contains affiliate links, which means I may earn a small commission if you purchase through my link – at no extra cost to you.”
That kind of transparency isn’t optional, it’s a requirement.
But here’s the important thing for business owners to know: it’s not JUST the affiliate’s responsibility to be in compliance. As the program owner, you’re expected to make sure your affiliates are following disclosure rules.
That’s why having an Affiliate Agreement in place matters so much. It’s the legal agreement that sets the legal ground rules for how your affiliates promote your products or services, disclose the affiliate relationship, and get paid their commissions.
What is an Affiliate Agreement?
So what exactly is an Affiliate Agreement, you may ask?
In the most simple terms, an Affiliate Marketing Agreement is the contract that protects the relationship between you (the business owner) and the people promoting your products (your affiliates).
This contract is like the rulebook for your affiliate program that outlines what affiliates can and can’t do, how they’ll earn commissions, how payments are handled, and what happens if the rules aren’t followed.
Without it, you’re essentially trusting that everyone promoting your business will act ethically, use approved materials, and disclose properly, when, in reality, they might not even realize what’s required, which is why it’s on YOU to make sure they know what’s expected of them.
What Should an Affiliate Agreement Include?
Even though it’s on you as the business owner to make sure your affiliates know what’s expected of them, if you’ve never run an affiliate marketing program before, you might have some questions of your own…
“What kind of information do I need to give my affiliates?”
“What should my affiliate marketing agreement include?”
To help you make sure that you’re covering all of your bases, here’s a checklist of the most important clauses your Affiliate Marketing Agreement should have before you kick off Q4 promos:
Commission Structure + Payment Terms
Spell out exactly how commissions are earned (percentage or a flat fee), when payments are issued (such as, 30 days after sale), and how returns or chargebacks are handled. This prevents payment disputes later.
Affiliate Responsibilities
Define what affiliates must do to stay in good standing, like using correct tracking links, following disclosure requirements, and representing your brand accurately.
Prohibited Practices
List out what affiliates CAN’T do, such as bidding on your brand name in ads, spamming, or making false claims about your products. This protects your brand reputation and keeps you compliant with advertising laws.
FTC + Legal Compliance
Include a clear reminder that affiliates must comply with FTC disclosure rules (and link to them for convenience). As the business owner, it’s on you to make sure your affiliates understand this expectation!
Intellectual Property Clause
Affiliates often use your logo, graphics, or promotional materials and this clause clarifies that they can use those assets only for promoting your approved offers, and that ownership remains yours.
Termination Clause
One of the most overlooked aspects of an affiliate agreement is leaving yourself an out as the business owner. If you later choose you want to close the affiliate program OR if you want to be able to remove affiliates from your program if they violate your rules or harm your brand, you need a termination clause that allows you to do just that!
Governing Law + Dispute Resolution
Lastly, if issues arise, this clause explains how disputes will be resolved and under which state’s laws. And yes, trust me that detail is very necessary!
Affiliate Marketing Agreement Template for Online Business Owners
Overall, adding an affiliate program to your online business can be a really smart move when you do it correctly and legally from the beginning.
Speaking from experience, your affiliates can be some of your best salespeople, allowing you to focus on other areas of your business while still earning income and being able to reward others along the way.
To help you launch (or relaunch) your affiliate program for your Q4 promo season, we created an Affiliate Marketing Contract Bundle that includes both of the necessary legal agreements you need to legally, ethically, and successfully utilize affiliate marketing to grow your business.
The bundle includes an Affiliate Marketing Agreement and Affiliate Program Terms and Conditions so you have everything you need right from the start!
PLUS, when you purchase the bundle, you’ll get:
✔️ an attorney walkthrough video from yours truly
✔️ Word and Google Doc versions (so you can easily edit in whichever platform you love best)
✔️ a customization guide that you can follow step by step
✔️ AND future updates included if the legal landscape ever shifts!
Here’s to using affiliate marketing the legal way. 👏🏼
P.S. Speaking of affiliates, if you’ve purchased a TBL Contract before and you love our templates, YOU can become a TBL affiliate. CLICK HERE to learn more!
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Written by Amber Gilormo, founder of The Boutique Lawyer, a licensed attorney who helps creative entrepreneurs protect their work with legally sound contracts, trademarks, and business systems. Her signature collection of creative-friendly legal templates has supported thousands of business owners in protecting and scaling their brands.
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