Free Commission Agreements - Manufacturer Rep Agency Principal

Sample Manufacturer Rep Principal Compensation Agreement

iManufacturer Rep Principal Compensation Agreement

Revision Date: ___________

This document describes the agreement between ______________________
(“Company”) and ____________________ (“Sales Rep”) regarding terms related to compensation.
Company and Sales Rep enter into this agreement whereby Sales Rep provides sales services to the Company as an independent contractor in return for compensation specified in this agreement.

Duration:

This agreement covers the period starting from ii and ends on.
Commissions will be calculated monthly, for the preceding month. Commissions will be calculated and paid within 15 days of the end of the prior month.

Basic Sales Commission

Sales Rep gets commission for sales booked, and only when the Company earns revenue from the manufacturer for that sale. The commission is a flat commission percentage of incoming commissions from the manufacturer. This commission is paid every month.

Sales Credits:

Sales Rep gets credit for sales according to the following rules.
 Any sales that are due to the Sales rep’s primary efforts are considered for this commission.
 Sales order should have been registered by the manufacturer as a valid sale associated with the sales rep.
 Manufacturer should calculate commission due and transfer the amount to the company.
 Sales credit to the sales rep is the commissions collected by the Company.

Split Sales Creditsiii:

If another sales credit was involved in the sale, the sales credit will be split between the sales reps at a negotiated split rate.

Calculation:

Sales credits are used as the basis to calculate commissions from. The below commission rate is applied against the sales credit.
Commission rate is: 70% of Sales Credit

Example:

Assuming Sales Rep the first month completed the following sales for a manufacturer-
Invoice1 $5,000
Invoice2 $8,000
Invoice3 $2,000

And in the second month Company has received the following commissions from the manufacturer: Invoice2 $2,000
Invoice3 $500

Commissions for the second month will be calculated as following:
Invoice 2
$2,000 at 70%
= $1,400
Invoice 2
$500 at 70%
= $350
Total Commission: $1,750

Principal Override Commission

Sales Rep gets an override for all sales made by the agency.
Sales rep gets commission for sales booked, and when the Company earns revenue from the manufacturer for that sale. The commission is an additional flat commission percentage of incoming commissions from the manufacturer. This commission is paid every month

Sales Credits:

Sales Rep gets credit for sales according to the following rules.
 Any sales that are booked by any one in the agency are considered for this commission.
 Sales order should have been registered by the manufacturer as a valid sale associated with the agency.
 Manufacturer should calculate commission due and transfer the amount to the company.
 Sales credit to the sales rep is the commissions collected by the Company.

Calculation:

Sales credits are used as the basis to calculate commissions from. The below commission rate is applied against the sales credit.
Commission rate is: 10% of Sales Credit
Example:
Assuming Sales Rep the first month completed the following sales for a manufacturer-
Invoice1 Sales Rep 1 $5,000
Invoice2 Sales Rep 2 $8,000
Invoice3 Principal $2,000

And in the second month Company has received the following commissions from the manufacturer:
Invoice2 $2,000
Invoice3 $500
Commissions for the second month will be calculated as following:
Invoice 2
$2,000 at 10%
= $200
Invoice 3
$500 at 10%
= $50
Total Commission: $250

Travel and Expenses:

Other Compensation:

Sales rep is not due any other compensation as part of this agreement. Usual expenses related to the sales process such as phone and internet services will be borne by the Sales rep.
Any other reimbursable expenses have to be pre-approved by Company.

Termination of Agreement

This Agreement may be terminated by either party upon ten (10) days written notice to the other party. On voluntary or involuntary termination of Sales rep’s engagement with the Company, commissions will be paid on revenues collected prior to the termination date only. Any amounts owed to the Sales rep will be paid out after withholding any dues.

Other Terms

 Sales rep is deemed an independent Sales rep and is not considered an employee of the company.
 Sales rep agrees to follow all Federal and Local laws while engaged in providing services to the Company during the period of this agreement.
 Sales rep shall not engage in any other similar engagement including other employment during the term of this agreement.
 Sales rep shall indemnify Company and hold harmless against any Loss or Damage incurred by the Company due to Sales rep’s gross negligence or misrepresentation during the duration of this agreement.

And in the second month Company has received the following commissions from the manufacturer:
Invoice2 $2,000
Invoice3 $500

Commissions for the second month will be calculated as following:

Invoice 2
$2,000 at 10%
= $200
Invoice 3
$500 at 10%
= $50
Total Commission: $250

Travel and Expenses:

Travel and related expenses are considered the responsibility of the sales rep and are not ordinarily reimbursable. If considered necessary and approved by the Company for an effective sales process, then these will be reimbursed.
Other Compensation:
Sales rep is not due any other compensation as part of this agreement. Usual expenses related to the sales process such as phone and internet services will be borne by the Sales rep.
Any other reimbursable expenses have to be pre-approved by Company.
Termination of Agreement
This Agreement may be terminated by either party upon ten (10) days written notice to the other party. On voluntary or involuntary termination of Sales rep’s engagement with the Company, commissions will be paid on revenues collected prior to the termination date only. Any amounts owed to the Sales rep will be paid out after withholding any dues.
Other Terms
 Sales rep is deemed an independent Sales rep and is not considered an employee of the company.
 Sales rep agrees to follow all Federal and Local laws while engaged in providing services to the Company during the period of this agreement.
 Sales rep shall not engage in any other similar engagement including other employment during the term of this agreement.
 Sales rep shall indemnify Company and hold harmless against any Loss or Damage incurred by the Company due to Sales rep’s gross negligence or misrepresentation during the duration of this agreement.

 Sales rep shall use the most ethical practices while engaging in any sales activity.
 This entire agreement shall be governed by the laws of the State of __________________.
Company Sales Rep
______ ______
By By
______ ______
Name Name
______ ______
Date Date

i Any part of this document can be changed or overridden based on your needs.
ii Enter the start and end date for the sales commission plan effective period. Most companies use the calendar or fiscal year start and end dates for these values. Some companies may not have an end date specified.
iii Sales credit can be split if two or more reps are involved in a sale. The split can be at a pre-defined rate or can be negotiated. Splits can also be disallowed.