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How to Legally Set Up an Affiliate Program

How to Legally Set Up an Affiliate Program

If you’re a business owner selling products or services online, you’re probably no stranger to the concept of affiliate marketing.

This type of marketing first gained traction in the influencer and blogging community as a way for them to earn a majority of their income.

Recently, affiliate marketing has developed into something that almost all business owners (regardless of their industry) are taking part in.

And I get it! Having affiliate programs for your products or services OR becoming an affiliate for various businesses is a great way to earn passive income and I’m allll for it. 

But like anything, I want to make sure you’re doing it all legally.

While I LOVE the online business world and am all for people making money, one thing that continues to give me the ick is how people conduct business on the daily in a way that’s completely non-compliant. 🥴

And the reason this happens so often is because it’s EASY to do. It’s easy to sell something online without making sure you’re legally backed or following all the right steps. 

I will admit though that it’s not always your fault. If you stumbled into the world of entrepreneurship, there’s a high chance you didn't go to school for this and you simply don’t know what you don’t know. 

But that’s what I’m here for! To make sure that you know all of the legal requirements that you MUST follow as a business owner – aka someone selling products or services in any capacity. 

On the blog, you’ll find almost everything you need to know about running a business legally – from contract requirements to legal mistakes to avoid and everything in between – I’m letting you in on it all so that you can KEEP more of the money you make and save yourself a whole lot of time while doing it!

In this blog post specifically, you’ll learn how to legally set up an affiliate program as a business owner and avoid some of the headaches that tend to be attached with affiliate marketing. 

There is a way to do this the RIGHT way so that both – you and your affiliates – win. 🏆

Must Have Contracts For All Affiliate Programs

Setting up an affiliate program can be a great way to expand your business's reach and increase sales through partnerships with other business owners or existing customers.

This is a very common marketing strategy, especially in the online business world, and essentially rewards those who refer people your way. 

As great as affiliate marketing can be, it’s not as simple as saying, “Hey! I’ll pay you a commission if you send customers to me.”

While I wish it were that simple, the truth is that any kind of legal business requires a little more work than that. But that doesn’t mean this has to be complicated. 

If you want to set up an affiliate program for your business, there’s a few contracts that you’ll need FIRST!

Depending on the type of affiliate program you plan to have, the types of contracts you have in place can vary.

If you’re a business owner who wants to set up an affiliate program where ANYONE can apply, you’ll want to have an Affiliate Program Terms and Conditions in place. 

This legally binding agreement between you and your affiliates allows you to ensure that they know:

✔️ how and when they will get paid

✔️ what they can and can’t do to promote your product or service

✔️ all the nitty gritty details, such as percentages, code of conduct, payment terms, limitations of liability

✔️ AND most importantly, their partnership disclosure obligations under the Federal Trade Commission (and more)  

This set of terms and conditions are what your affiliates will agree to upon applying for your affiliate program and it’s essentially them acknowledging that they understand how the program works and what they can expect. 

Once they apply, they will go through a review and approval process on your end before being granted affiliate access.

Without having affiliate terms and conditions, you run the risk of affiliates expecting to be paid more than what’s actually due to them, promoting your products or services in a way that you don’t agree with or experiencing legal trouble that could've been easily avoided.

This contract alone can be the thing that legally protects you in the instance that an affiliate is giving you any sort of trouble.

On the other hand, if you want an affiliate program where you personally approach or engage with potential affiliates on a 1:1 basis, meaning not just anyone can apply, you’ll want to have an Affiliate Agreement in place. 

Once you approach potential affiliates and they say, “yes, I’m in!” this is the agreement that they will actively sign to acknowledge the specifics of your unique affiliate program.

This type of affiliate contract is more common for service providers who aren’t selling specific products, rather they are seeking referrals for their services.

How To Legally Protect Yourself As An Affiliate

In addition to being legally compliant as a business owner with an affiliate program, you also want to make sure that you are complying with all affiliate rules made by the Federal Trade Commission (FTC) if you are acting as an affiliate for someone else as well. 

For example, let’s say you purchase contracts from my contract shop and decide to become an affiliate with me

That’s great and I would absolutely love that for you when you are appropriately disclaiming your affiliate relationship when promoting my products!

And the way you do this is actually way more simple than you might think. ⬇️

Here’s my permission to copy and paste this affiliate disclaimer to use any time you’re promoting mine or someone else’s product or service in a way that could generate income:

"Affiliate disclaimer: Some of the links in this [post/page] are affiliate links, which means that if you click on a link and make a purchase, I may receive a commission. This commission comes at no additional cost to you and helps to support my business. Please note that I only recommend products and services that I personally use and trust. I will always disclose when a link is an affiliate link, and I never recommend a product or service solely for the purpose of earning a commission."

This disclaimer fully addresses the fact that you are using commissionable links or codes and makes your audience fully aware that you could earn money from their purchases!

Without disclaiming these potential earnings, your passive income could be all for nothing because yes, the FTC can and will enforce action (aka sue you 🙃) causing you to lose all your earnings. 

How To Set Your Affiliates Up For Success

If you want a successful affiliate program, one of the best things you can do on your end as a business owner is to set your affiliates up for success by providing them with everything they need to promote your products or services with ease.

This could come in the form of an affiliate packet that includes marketing materials that they can swipe (including images and copy), content ideas, easy access to their affiliate links and of course that affiliate disclaimer from above that they can copy and paste!

You also want to make sure that your affiliates have a designated spot for communication so they can ask you questions, but you can also provide them with need-to-know information on a consistent basis. 

This could be done through a specific affiliate email address, an affiliate Slack channel or through your affiliate program directly.

You could also implement specific affiliate trainings that address certain things you want your affiliates to know which can serve as a huge value add for your program. 

One last legal tip (for now), make sure to send occasional reminders to your affiliates that they need to be posting disclaimers for affiliate links on social media posts, in stories, videos and even emails and blogs. 

Overall, the more thought and intention you put into your affiliate program, the more likely that both YOU and your affiliates will see results!

Here’s to making more passive income… and actually being able to keep it. 💸