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, which means having the legal side locked in before affiliates start promoting on your behalf.
Because while affiliate marketing is absolutely legal (more on that topic in a minute!), it's also regulated at the federal level, 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 thinking about launching (or relaunching) an affiliate marketing program for your business, keep reading to make sure you have everything in place to help protect yourself, your business, and your affiliates along the way.
What Do You Need to Legally Protect Your Affiliate Marketing Program?
A legally protected affiliate marketing program starts with an Affiliate Agreement, which is the contract between you (the business owner) and the people promoting your products (your affiliates).
The agreement should cover commission structure and payment terms, affiliate responsibilities, prohibited practices, FTC disclosure requirements, intellectual property usage, termination rights, and dispute resolution.
Having this agreement in place before affiliates start promoting helps reduce the risk of compliance issues, payment disputes, and brand misrepresentation.
- Commission structure: spell out percentages or flat fees, payment schedule, and chargeback handling.
- FTC compliance: require affiliates to disclose the relationship clearly and conspicuously on every platform.
- Prohibited practices: restrict brand-name ad bidding, spamming, and false product claims.
- Intellectual property: grant limited use of brand assets for approved promotions only.
- Termination rights: reserve the right to remove affiliates who violate program rules.
Is Affiliate Marketing Legal?
Affiliate marketing is a legitimate and legal business model. 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 non-compliant, however, is failing to follow FTC disclosure guidelines.
The Federal Trade Commission (FTC) requires affiliates to clearly and conspicuously disclose when they're promoting something they'll earn a commission from. You've likely 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 legal requirement under the FTC's Endorsement Guides (16 CFR Part 255).
But here's the important thing for business owners to know: it's not just the affiliate's responsibility to be in compliance. Under the FTC's updated Endorsement Guides, advertisers (that's you, the program owner) are expected to provide guidance, monitor compliance, and take action when affiliates don't follow the rules.
That's why having an Affiliate Agreement in place matters so much. It's the legal agreement that sets the ground rules for how your affiliates promote your products or services, disclose the affiliate relationship, and earn their commissions.
What Is an Affiliate Agreement?
An Affiliate Agreement is the contract between you (the business owner) and the people promoting your products (your affiliates).
This contract is like the rulebook for your affiliate program. It 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 one, 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. That's 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 Agreement should include:
Commission Structure and 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 helps prevent 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 paid ads, spamming, or making false claims about your products. This helps protect your brand reputation and supports compliance with advertising laws.
FTC and Legal Compliance
Include a clear requirement that affiliates must comply with the FTC's Endorsement Guides, including disclosing the affiliate relationship clearly and conspicuously on every platform where they promote your products. As the business owner, you're expected to provide this guidance, monitor for compliance, and take action if an affiliate falls short.
Sample FTC compliance clause: "Affiliate agrees to clearly and conspicuously disclose the affiliate relationship in connection with every endorsement, review, or recommendation of Company's products or services, in compliance with the Federal Trade Commission's Endorsement Guides (16 CFR Part 255). Company reserves the right to review Affiliate's promotional content for compliance at any time."
Intellectual Property Clause
Affiliates often use your logo, graphics, or promotional materials. 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 parts of an affiliate agreement is leaving yourself an out as the business owner. If you later choose to close the affiliate program, or if you need to remove an affiliate who violates your rules or harms your brand, you need a termination clause that gives you the right to do that.
Governing Law and Dispute Resolution
If issues arise, this clause explains how disputes will be resolved and under which state's laws. It's an important detail that helps avoid confusion if a disagreement ever needs to be escalated.
Affiliate Agreement vs. Affiliate Program Terms: Do You Need Both?
You might be wondering whether you need an Affiliate Agreement, Affiliate Program Terms and Conditions, or both. Here's the short answer: they serve different purposes, and having both gives you stronger coverage.
| Document | Purpose | How It Works |
|---|---|---|
| Affiliate Agreement | The signed contract between you and each affiliate | Covers commission terms, IP rights, termination, and dispute resolution; typically signed before the affiliate begins promoting |
| Affiliate Program Terms and Conditions | The program-wide rules that apply to all affiliates | Covers general program policies, promotional guidelines, and compliance expectations; often published on your website and accepted at sign-up |
Using both documents together means you have a signed, individualized agreement with each affiliate and a set of program-wide rules that can be updated as your business and program evolve.
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 the right way, we created an Affiliate Marketing Contract Bundle that includes both of the legal agreements you need to legally, ethically, and successfully run an affiliate marketing program for 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
- 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. Join the TBL affiliate program here!
Frequently Asked Questions About Affiliate Marketing Agreements
Do I need an affiliate agreement if I only have a few affiliates?
Yes. The number of affiliates doesn't change the legal requirements. The FTC's Endorsement Guides apply regardless of how large or small your affiliate program is, and having even one affiliate promote your products without clear terms in place creates risk for your business. An Affiliate Agreement helps set expectations and protect both sides from the start.
What happens if my affiliate doesn't disclose the relationship?
Under the FTC's updated Endorsement Guides, the program owner (not just the affiliate) may be held responsible if affiliates fail to disclose properly. The FTC expects business owners to provide clear guidance, monitor affiliate content, and take action when violations occur. Having an Affiliate Agreement that spells out disclosure requirements, along with a process for monitoring compliance, helps demonstrate that you've taken reasonable steps.
Can I use the same affiliate agreement for all of my affiliates?
In most cases, yes. A well-drafted Affiliate Agreement is designed to be used across your program, with customizable fields for things like commission rates, payment schedules, and specific promotional guidelines. If you have affiliates with significantly different arrangements (such as a higher commission tier or exclusivity), you may want to adjust those terms on a per-affiliate basis.
Is an affiliate agreement the same as an influencer contract?
Not exactly. While there's some overlap (both typically address FTC disclosure and intellectual property), an influencer contract usually covers a specific campaign or set of deliverables, while an Affiliate Agreement governs an ongoing, performance-based relationship where the affiliate earns a commission on sales. If someone is both an influencer and an affiliate, you may need both types of agreements.
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ABOUT THE AUTHOR, AMBER GILORMO – ATTORNEY AND FOUNDER OF THE BOUTIQUE LAWYER
Amber Gilormo is the cool lawyer behind The Boutique Lawyer – a one-stop contract template shop for creative entrepreneurs, online business owners, coaches, and service providers.
From client agreements to digital product terms and everything in between, our lawyer-drafted templates take the guesswork out of staying legally protected online (no legal jargon required).
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