Purpose
This procedure applies to all referrals and conjunctions where the Referring Business Readiness Consultant (licensed or Unlicensed) requests a commission from a Licensed Consultant.
This agreement should always be in writing and follow a documented procedure. If there is no documentation, disputes can arise.
Procedure
When an Business Readiness Consultant refers a prospective Deal Owner
- The lead should be self-generated and not be referred by Business directly.
- As a Consultant, the typical referral commission is 20%-30% of the total commission where the lead is referred and the referrer is no longer involved in the transaction.
- Where the referring Consultant is a Licensed Consultant and the they intend to work on the deal, a typical split is 30%-50% of the total gross commission and subject to negotiation between the parties.
- The referring Consultant is required to prepare an invoice and present this to the Selling Agent prior to settlement.
Please note that state laws may require disclosure of the commission or flat fees vs percentage-based commissions. We recommend you check your state legislation before entering into any commission-based referral arrangement. As an alternative, consider a flat fee based purely on the Consultants preparation or due diligence work.
Example: The referring Consultant may offer to spend 30 or 40 hours of unpaid work on the business due diligence preparation at $200 per hour to be paid at settlement.
Steps
- Contact a Licensed Business Broker to discuss the business, be upfront about your expectation in relation to a referral commission. Note: Negotiate courteously.
- Using the Business dashboard, select the invitation section, send the referral or conjunction agreement via the Deal Room.
- Choose Conjunction or Referral then select the listing and enter the proposal commission.
- Ensure you receive a response, this avoids any potential conflict in the future.