Each Business Kitz resource contains comprehensive guidance notes as well as helpful suggestions to assist you with populating the document.
This Profit Sharing Agreement template includes the following sections:
- Optional cover letter
- Comprehensive Details Schedule
- Relationship of parties
- Profit share arrangement
- Excluded services
- Appointment and services
- Scope of services
- Standard of work
- Approval of marketing material
- Fees and expenses
- Statutory obligations, insurances and registrations
- Treatment of conditional information
- Use of confidential information
- Disclosure of confidential information by the recipient
- Return of confidential information
- Protection of Principal’s business
- Intellectual property
- Protection of Principal’s reputation
- Indemnity and liability
- Restraint of trade
- Delivery upon termination
- Dispute resolution
- Entire Agreement
- Definitions and interpretations
- Execution page
Why does my business need a Profit Sharing Agreement?
A Profit Share Agreement should be used if your business wants to achieve a particular goal, project or product with another and profits are to be shared by the parties. It is essential to be clear what ‘profits’ are.
A Profit Share Agreement is different to a Revenue Share Agreement which involves sharing the revenue, (the total amount of income generated by the sale of goods and services) whereas profit sharing needs to consider removing the costs associated with the particular sales in mind.
A Profit Share Agreement should be utilised when the parties want to share the revenue left over after costs have been removed. Profit sharing can sometimes be difficult unless the profit sharing is clear (ie are you going to agree to direct costs or will it be the profits in the business that show on accounting records). For example, businesses often run costs through their businesses such as the cost of cars and fuel. Do you intend for all of these costs to be considered or are you only going to agree to direct costs?
This Profit Sharing Agreement template allows for the parties to clearly agree to the different types of costs by breaking down the costs (this is simple to follow in the Profit Share Agreement Template – there are descriptions and examples provided):
- Total costs
- Direct costs
- Indirect costs
The costs for the profit sharing arrangement need to be identified and determined to ensure the agreement between the parties is clear and the costs agreed to are considered. Most disputes occur when the types of costs haven’t been considered and disputes are common without well-considered agreements in place.
If the parties want to share revenue (the total cost of sale and goods) (some people in business decide to do this to keep matters simple), then we suggest you purchase our Revenue Share Agreement Template.
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