Running an Affiliate Program Legally and Efficiently

Having others to promote your products and services is one of the easiest and most effective ways to grow your business.  Thanks to the Internet, influencers and trusted brands in industries have voices that far surpass the most extensive marketing budgets typically including line items for advertisements and customer satisfaction programs.

Affiliate marketing takes these influencers and expands your business by offering compensation to the affiliate when the affiliate generates traffic, either leads or sales for you.

For example, here at RachelBrenke, we have an affiliate program that pays 30% of sales for each sale on our contract template forms and educational courses.  In order for affiliate programs, like ours, to work legally and efficiently, we need to protect our brand, set terms in place, stay within tax laws, and provide the right tools to our affiliates.

Protect Your Brand With Standards

Using RachelBrenke’s affiliate program as an example, in an effort to protect my brand and ensure I only have influencers who believe in our product and will bring our target client, we have an application process and requirements for the type of individuals who promote us.  I recommend that you consider standards that best serve your audience.

For example, our standards include the following:

• a personal interview with yours truly
• the applicant’s review of our products
• the morals and ethics of the applicant
• an examination of the applicant’s audience and influence

Never accept any affiliate that comes along – many may be seeking to get advanced notice of sales and have no real commitment to your brand and message.

Terms of Program

The terms of the affiliate program are much like a site's terms of use.  They are for the affiliate program host to provide to the affiliates to govern the relationship.  This policy is a legal document that outlines the terms and conditions of your affiliate program.

This is SUPER important to have if running any business online with affiliates!  If a legal issue should arise, you will be able to point to this document.

It should address the following topics:

• Description of program
• Enrollment
• Links on Affiliate Site
• Program Requirements
• Responsibility of affiliates
• Ordering processing
• Advertising fees
• Fee payment
• Policies
• Identifying self as an affiliate
• Limited License
• Reservation of rights
• Term and Termination
• Compliance with laws

Check out the Affiliate Program Terms of Use Template at our sister site, TheLawTog, here

Stay Within The Tax Laws

Don’t forget, if you’re a United States-based business, anytime you pay out over $600 in a calendar year to one individual and/or company, you must remit a 1099 form identifying these funds.  The great news is that payment processors, such as Paypal, will do these forms for you without charge.

However, having a CPA remit the forms is a relatively low cost (and a deductible one!) for your business.  The best part of getting affiliates to earn over $600 is that the amount is not included in your tax liability.  It is shifted to them.

Provide Legal Tools

Always make sure that you’re providing your affiliates tools that are free of infringement issues.  Never provide “borrowed” or “stolen” images, text, logos, etc.

Also, provide your affiliates guidance for how to use your logo and images.   For example, take a look at your photographer’s commercial license for your headshots – does it allow for altering or cropping?  If not, this needs to be relayed.

Further, do you want this to occur to your images or logos?  Keep in mind, if you have a registered trademark, affiliates should be informed of this and use the trademark in accordance with the filing.

Recommended Affiliate Tools

($) Affiliate WP – WordPress Plugin

($) WordPress Affiliate Manager – plugin

($$) iDev Affiliate

($$$) Ontraport (aff link)