Overview
Referral and affiliate partnerships involve sharing valuable business information - customer leads, pricing structures, commission rates, and sales materials. Protecting this information is essential for maintaining competitive advantage and ensuring the partnership operates on fair terms.
Unlike deep strategic partnerships, referral relationships often require simpler confidentiality structures. However, specific provisions around customer handling, commission confidentiality, and termination are critical.
💡 NDA vs. Referral Agreement
Most referral partnerships need both an NDA (covering confidential information) and a Referral Agreement (covering commissions, terms, and obligations). The NDA may be standalone or integrated into the broader referral agreement as a confidentiality section.
Types of Referral Partnerships
Different referral relationship types have different confidentiality needs.
Commission-Based Referral Partners
Structure: Partner refers leads and earns commission on closed deals.
Information typically shared:
- Commission rates and structures
- Pricing information for referral discussions
- Sales materials and pitch decks
- Customer qualification criteria
- Deal status and pipeline information
NDA approach: Usually one-way (protecting your information), unless partner shares proprietary methodologies.
Affiliate Partners
Structure: Partner promotes through content, ads, or email marketing with tracked links.
Information typically shared:
- Commission/payout structures
- Marketing materials and creatives
- Product information and pricing
- Conversion data and analytics
- Target audience insights
NDA approach: Often integrated into affiliate terms; focus on marketing material usage rights and commission confidentiality.
Channel Partners / Resellers
Structure: Partner sells your product/service and handles customer relationships.
Information typically shared:
- Wholesale/reseller pricing
- Technical product information
- Customer support procedures
- Sales training materials
- Customer data and CRM access
NDA approach: Comprehensive mutual NDA; they handle your customer relationships and may share their market intelligence.
Reciprocal Referral Partners
Structure: Both parties refer leads to each other in complementary industries.
Information typically shared:
- Customer information (both directions)
- Pricing for referred customers
- Commission/referral fee structures
- Sales materials from both parties
NDA approach: Mutual NDA required; both parties share sensitive information.
What to Protect
Referral partnerships involve several categories of sensitive information:
💰 Commission Structures
Referral fees, commission percentages, bonus tiers, payout schedules, and accelerator programs
📊 Pricing Information
Retail pricing, discount authority, special pricing for referrals, and deal-specific quotes
👥 Customer Data
Lead information, customer contact details, deal status, and customer communications
📄 Sales Materials
Pitch decks, proposals, case studies, competitive positioning, and objection handling guides
Why Commission Confidentiality Matters
Commission rate confidentiality is critical for several reasons:
- Partner management: Different partners may have different rates based on volume, exclusivity, or relationship
- Competitive intelligence: Your margin structure shouldn't be exposed to competitors
- Negotiation leverage: New partners shouldn't know what existing partners receive
- Industry benchmarking: Commission rates are often closely guarded
⚠ Customer Lead Ownership
Clearly define in your NDA (or referral agreement) who owns customer data and leads. Ambiguity about lead ownership is a common source of disputes when referral relationships end.
Mutual vs. One-Way NDA
The direction of confidentiality obligations depends on your referral structure:
| Scenario | Recommended NDA Type | Rationale |
|---|---|---|
| Basic lead referral | One-way (you disclose) | Partner receives your pricing/materials; doesn't share proprietary info |
| Affiliate marketing | One-way or Terms-based | Often handled via affiliate agreement terms |
| Reseller/channel | Mutual | Partner handles customers and may share market insights |
| Reciprocal referrals | Mutual | Both parties share customer and pricing information |
| White-label partnership | Mutual with enhanced terms | Deep integration requires comprehensive protections |
Key NDA Provisions for Referral Partners
1. Definition of Confidential Information
Be specific about what's protected in referral relationships:
- Commission rates, structures, and payment terms
- Customer and prospect information shared for referral purposes
- Pricing, discount structures, and deal-specific quotes
- Sales materials, training content, and competitive information
- Partnership terms and exclusivity arrangements
2. Purpose Limitation
Restrict use of information to the referral relationship:
📝 Sample Purpose Clause
"Receiving Party shall use Confidential Information solely for the purpose of identifying and referring potential customers to Disclosing Party, and performing obligations under the Referral Agreement. Receiving Party shall not use Confidential Information for any other purpose, including to compete with Disclosing Party or to solicit customers for competing products or services."
3. Customer Data Handling
Address how customer information is managed:
- Data ownership: Who owns leads and customer data?
- Handoff procedures: How is customer information transferred?
- Retention limits: How long can partner keep customer data?
- Privacy compliance: How are data protection requirements met?
4. Non-Solicitation of Customers
Prevent partners from using referral relationships to poach customers:
📝 Sample Non-Solicitation Clause
"During the term of this Agreement and for [12-24] months thereafter, Referral Partner shall not directly solicit customers introduced through this referral relationship for products or services that compete with those offered by Company. This restriction applies to customers introduced through Partner's referral activities, not to relationships that existed prior to this Agreement."
5. Exclusivity Confidentiality
If you offer exclusive territories or terms, protect that information:
- Existence and terms of exclusivity arrangements
- Geographic or industry territory definitions
- Performance requirements for maintaining exclusivity
- How exclusivity affects commissions and pricing
Upon Termination
What happens when the referral relationship ends is critical. Your NDA should address:
Return of Materials
- Sales materials: Return or destroy all sales collateral
- Customer data: Clear return/purge requirements
- Training materials: No continued use after termination
- Pricing information: Cannot retain or use historical pricing data
Continuing Obligations
- Commission confidentiality: Rates remain confidential indefinitely
- Customer non-solicitation: Typically 12-24 months post-termination
- Information protection: Survival period of 2-3 years minimum
- Pipeline protection: Deals in progress at termination should be addressed
🔴 Common Dispute: Pipeline at Termination
Address what happens to referred leads that haven't closed when the relationship ends. Do they still earn commission? For how long? This should be in your referral agreement, but confidentiality obligations around these pending deals should be in the NDA.
Red Flags in Partner NDAs
Watch for these problematic provisions when reviewing a potential partner's NDA:
- One-way when it should be mutual: If you're sharing customer information with them, you need reciprocal protection
- No customer data provisions: Lack of clarity on lead ownership and handling
- Missing non-solicitation: Nothing preventing them from taking your customers
- Short survival period: Commission and customer information need extended protection
- Broad "affiliate" sharing: Your information shouldn't be shared with their other partners
- Residuals clause: Could allow them to use memorized customer and pricing information
Referral Partner NDA Checklist
Essential Terms for Referral Partner NDAs
Template Configuration
When generating an NDA for referral partnerships:
| Setting | Recommended Value | Rationale |
|---|---|---|
| Type | One-Way or Mutual (based on structure) | Depends on information flow |
| Definition Style | Specific categories | Call out commissions, pricing, customers |
| Term | Matches referral agreement term | Aligned with partnership duration |
| Survival | 2-3 years | Longer for commission/customer info |
| Residuals | Excluded | Protect memorizable pricing/customer data |
| Non-Solicitation | Customers (12-24 months) | Standard for referral relationships |
| Return Obligation | Required upon termination | Materials shouldn't remain with ex-partner |
Next Steps
- Identify partnership type: Determine what kind of referral relationship you're establishing
- List sensitive information: Document what will be shared with the partner
- Choose NDA structure: Mutual or one-way based on information flow
- Generate/customize NDA: Use template with referral-specific provisions
- Coordinate with Referral Agreement: Ensure NDA and referral terms are aligned
📝 Related Resources
Partnership Talks NDA - For exploring deeper partnerships
Strategic Alliance NDA - For formal alliance relationships
Email Templates - For proposing your NDA to partners