What Is an affiliate ?
An affiliate, in general business terms, is an “ official fastening ” of one business entity to another. official attachment implies a narrow or agreement of some kind and an announcement to the public of the connection between the two businesses. Whether one clientele is an affiliate of another is based on common ownership, coarse management, and the universe of a contract.
The SBA says that an individual, entity, or commercial enterprise ( Business A ) is an affiliate of another business ( Business B ) if Business B has control over Business A, based on one of respective factors. The SBA considers factors like possession, management, former relationships with or ties to another business, and contractional relationships.
In summation, parties to a joint speculation may be considered affiliates of each other in certain circumstances.
The condition “ affiliate ” has two specific uses in business context :
In corporate law and taxes, an affiliate is a company that is related to another caller, normally by being in the position of a penis or a subordinate role, a auxiliary .
In on-line retail, affiliation is common in marketing and selling wherein one company may affiliate with another to sell products or services. The seller has a web site on which affiliates may sell products. The seller has control over the locate and pays a commission to affiliates. This relationship is sometimes called “ affiliate marketing. ”
In broadcasting, local television receiver and radio stations are affiliates of a national network. These local stations are locally owned, but they use network contented and advertising.
Affiliates as freelancer Contractors
An affiliate is normally not part of the company with whom it affiliates. It ‘s a separate ship’s company, an independent contractor. While another a company may affiliate through ownership, that possession does n’t mean sum control .
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Affiliate marketing is an placement between a seller and another commercial enterprise that gives a sales commission to the consort for promoting a product or pipeline of products for the early party. Amazon consort programs are an model of this type of marketing.
Amazon ‘s Associate Program Operating Agreement clearly identifies Amazon and the Associate as autonomous contractors.
affiliate agreements can be entered into by any type of business, from exclusive owner to corporation. Affiliating with another company is a good way to promote your business and make more money by joining with person who has a test track record and a larger customer base. But before you join an affiliate program of any kind, consider these questions ( from Leslie Truex, Home Business technical ) .
An affiliate agreement is a condense between the two parties : the host or offer business and the affiliate. Like any other type of contract or agreement, it ‘s significant to put this affiliate agreement in writing .
Parts of an Affiliate agreement
An consort agreement condense should include answers to the be questions :
- What is the term of the affiliate agreement? Under what circumstances can either party terminate the agreement?
- What is the definition of “affiliate” in this situation?
- What is the relationship between the parties? Are they both independent?
- What are the rights and duties of the affiliate? Of the company?
- Who pays what to whom and when?
- What licenses are required of both the affiliate and the host business? Who owns the licenses? For example, a broadcast TV station must have a specific type of license, and keep that license up to date.
- Who owns the intellectual property? (Trademarks and service marks are the most common types of intellectual property in affiliate agreements.) What are the restrictions on the use of intellectual property by the affiliate?
- How are affiliate payments made and when? How can commissions be re-negotiated?
- What state law governs this agreement?
- What happens if either of the parties goes out of business?
- What happens if either party defaults on the agreement?
Standard Contract Language You Should Know About
If you are reviewing an affiliate agreement, you MIGHT see some other standard contract terminology. Three standard clauses you may see are :
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- A confidentiality/non-disclosure clause that keeps the affiliate from sharing proprietary business details with others.
- An indemnification clause (sometimes referred to as a “hold harmless” clause) that protects either party from harm for the actions of the other party.
- Mandatory arbitration is becoming a standard part of many business contracts. This clause requires the parties to use arbitration in a legal dispute, rather than the court process of litigation.
This article includes a general overview of types of affiliates and agreements. Every business situation is unique, so be sure to get help from an attorney in preparing any affiliate agreement. There may be “gotcha” clauses or language that you may not have seen or included. For example, if you are the affiliate, check to see what percentage of ownership, if any, the other company has in your business.