Introducer Agreements – When To Use Them And Why

Introducer agreements can help businesses to drive growth grow by increasing sales of products or services into previously untapped markets on a low-risk and cost-effective basis.

What is an introducer agreement?

Simply put, an introducer agreement is an agreement where one party makes introductions of potential customers who may wish to buy the products or services of another party typically in return for a fee or commission.

For example, a supplier may wish to enter a new market sector but has limited knowledge of potential customers in the sector. The supplier may therefore engage an introducer with specific knowledge of the sector as a cost-effective way of reaching new customers and growing its business.

Pros and Cons for suppliers

Pros:

• Access to untapped markets
• Driving growth at a low-cost
• Eliminating expensive dedicated marketing costs
• Eliminating dedicated employee placements

Cons:

• Reduced profit margin by paying introducer fees or commissions
• Less first point of contact with customers
• Introducer management required for compliance e.g. data protection and anti-bribery
• Oversight of activities if the market is regulated e.g. financial services

Typical provisions in an introducer agreement

• Nature of the relationship – introducer not agent
• Specific regulatory requirements
• Extent of introducer authority
• Exclusive or non-exclusive arrangement
• Extent of introduction territory
• Fee/commission rights and obligations
• Termination rights and obligations
• Limitations of liability

Do you need an introducer agreement?

The answer to this question really depends on the aspirations of the supplier concerned. If the objective is to reach new markets and achieve growth with a minimum of risk and up-front cost, then an introducer agreement may be a worthy contender for consideration.

One way or another, if this route is chosen, it is essential to have a properly structured and well drafted agreement in place for the protection of both parties.

How can we help?

The Corporate and Commercial team at Wilson Browne Solicitors is ideally placed to advise on all aspects of drafting and negotiating introducer agreements, whether for start-up businesses or more established SMEs. For a confidential and no obligation initial discussion about how we may be able to help, please contact the Corporate and Commercial team on 0800 088 6004.