Free Profit Sharing Agreement Template

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What is a Profit Sharing Agreement?

A Profit Sharing Agreement is a document that outlines the terms and conditions of a profit-sharing arrangement. It describes the ratio in which the parties involved shall share the profits and the losses, mainly in percentages.

The entire agreement shall be governed by and construed in accordance with the laws of the state. Hence the parties must discuss all the details and come to a common ground before entering into a partnership.

When is a Profit Sharing Agreement used?

A Profit Sharing Agreement usually comes into the picture when two parties agree to work together with the same goal or for a time-based project. The two entities stay as they are and do not create a new business just for the project, in other words, they form an unincorporated joint venture. Herein, both the parties agree to bring in different capabilities and skills to the table. Accordingly, the distribution of profits earned will reflect how the two parties shared responsibility and risk. Once there is an understanding of the parties regarding the profit and loss sharing, it is mindful to keep it in writing. This will keep all confusion and disputes at bay, resulting in a successful partnership.

In some cases, a Profit Sharing Agreement is also used in employment scenarios wherein the employees shall receive a partner treatment and provide them a sense of ownership. Based on the contract, an employee shall be entitled to a portion of the company’s profits although with some limitations as to how they can withdraw the funds.

What does a Profit Sharing Agreement include?

A Profit Sharing Agreement is a legal document that will usually contain the following elements:

• Purpose: In this section, you must mention the purpose of this document, which is to clearly note down the terms and conditions agreed upon by both parties involved in the agreement.
• Term: This section will talk about the time duration of the agreement’s validity. You can also mention the action that must take place at the end of the term, either renewal or termination.
• Responsibilities: In this clause, you must clearly write the duties and responsibilities that are applicable to both partners involved in the agreement. You can also mention how this agreement shall treat the intellectual property of both parties.
• Profit-Sharing: This is a crucial part of the agreement. Here, the investment and profit share ratio (in percentage) of each party, along with how it is calculated shall be mentioned. You can also mention the timeframe within which you would distribute the payments.
• Liability: This clause will talk about the details regarding the damages that one party will be required to pay to the other according to the terms and conditions of the agreement.
• Independent Contractor: In this clause, you can clearly mention that either party is not looking to build an employee-employer relationship and both parties will observe their governing law.
• Confidentiality: This clause must set forth certain guidelines stating whether either partner can disclose partnership details or not; even after the agreement is terminated.
• Termination: Another crucial part of the agreement is the Termination clause. It talks about when the agreement can be terminated, who can terminate it, and the consequences of the termination.
• Arbitration: In this clause, you shall mention that if there are any disputes regarding the agreement, they would be resolved by arbitration. You can also specify which representative would appoint the arbitrators.
• Miscellaneous: In this final clause, you can talk about the minute details like governing law, modification rules, notice duration, and severability of the agreement.

Use Revv’s Profit Sharing Agreement Template to amplify your creation process

A Profit Sharing Agreement is an exhaustive document containing ‘N’ number of clauses that must be written carefully with the help of a subject matter expert. This can easily delay your process by weeks and reduce your overall performance. But not with Revv!

Revv provides legally-vetted, carefully-designed, and customizable templates that will give you a kickstart and help you create agreements in a couple of days.

Here is a list of Revv’s advanced features handpicked for profit sharing agreement representatives:

Rich Editor

You can customize your profit sharing agreement according to your interests with Revv’s user-friendly and Rich Editor. With an easy drag and drop action, you can add different blocks like text, tables, eSignature tags, etc. You can also link Google Sheets and import data right within the agreement.

Form Fields

By transforming the details in your agreement into fillable placeholders called Form Fields, you can eliminate cumbersome tasks. With this, you only need to fill out each individual form field once, and the following instances of that field in the agreement will be filled out for you. Also, use Data Studio, a great data mapping tool to combine and bring in data from external apps.

Approval Workflows

Since a Profit Sharing Agreement has numerous clauses, you can get it double-checked by sending the agreement for internal approvals. When a clause has an approval workflow attached to it, any modifications to the clause will immediately initiate the workflow and send the agreement to the approvers.

eSignatures

Use Revv’s secure, legally valid, and fast eSignature facility to place your sign and close the agreement. It complies with the local and global eSignature laws including ESIGN Act, UETA, and eIDAS Regulation. Revv also generates an Evidence Summary, a legally admissible audit trail that records all the actions taken during the signing process.

Notifications

You can keep a track of your agreement’s status using Revv’s automated email notifications. Revv automatically creates and sends emails to both the sender and the recipient whenever you send an agreement for review, acceptance, or eSignatures.

Wait no more! Sign up with Revv and use this template to create a top-class, error-free Profit Sharing Agreement in no time.

Frequently asked questions

How do you write a profit sharing agreement?

A Profit Sharing Agreement is a legal document that contains the following elements - Purpose, Term, Responsibilities, Profit-Sharing, Liability, Independent Contractor, Confidentiality, Termination, Arbitration, and Miscellaneous.

What is a profit sharing clause?

A profit sharing clause is a section in the profit sharing agreement that describes the ratio (in percentage) in which both partners shall share the company’s profits and losses.

What is a profit agreement?

A profit agreement is a contract that comes into play between two companies that decide to operate jointly with the same objective. The agreement contains many clauses, one of which describes the ratio in which both parties shall share in the company’s overall earnings.

What if there is no profit sharing agreement?

If there is no profit sharing agreement written, then there are chances of a dispute between the parties involved in the partnership. This might lead to arbitration and finally, termination of the partnership.

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👋Hey there! Use form-based document generation to create error-free and consistent documents in minutes. This template contains fillable placeholders called form fields. Documents created using form template have an easy-to-fill form in which you enter data to complete the document.