What is the ideal payment arrangement between contractor and subcontractor?

If I hire a subcontractor to do group training sessions for me in their speciality (which I currently do not offer), what is the legal solution to revenue sharing? Please also share any cautionary tales if relevant. Thank you!


I would first attend that person's actual training sessions to judge his quality of delivery in a live setting.

Once convinced, the next question is the revenue sharing ratio. If he is doing most of the work, including development of the training material, while he is using my training company name then I would consider something like 70:30, to him after paying for all the direct expenses.

Of course, if the course fails to sell enough seats and is cancelled, or not cancelled but does not breakeven then the costs incurred including those on promotion should be evenly split.

You are free to negotiate any other ratios.

Answered 8 years ago

I would agree with Raza's answer, a 70:30 split in his favor, 75/25 max is fair if he is leveraging your brand and audience (distribution) but putting all the materials together and running it him/herself.

Another approach might be a 50/50 split on set up costs and revenue initially, but with a sliding scale interest of 70/30 or 75/25 in their favor over time or size as the program becomes more successful.

In addition, I would suggest clarifying in your mutual understanding of terms a set up budget and ongoing marketing budget that either you or both of you will be contributing to or are comfortable with to move this offering forward.

I also suggest covering off downside circumstances like what if you both have a falling out? What if he/she starts damaging your brand with destructive behavior or otherwise? I would suggest it important to ensure the subcontractor doesn't own the rights to the group training sessions themselves, that it is clear the individual is operating under your brand and you reserve the right to replace them later if there are any problems.

At the same time, if you were to seek replacing them later once the brand has been built up, I would suggest you will want to establish a method to determine break terms as well. A subcontractor with any experience will want some coverage that you will not just kick them out at a later date once the program is successful if greed and egos get involved, which they often can.

In all of my own negotiations of this type, I personally lay out all the 'what ifs' at the beginning of the partnership journey so there are no surprises on these fundamental levels if/when these things come up down the road.

Hope this helps. Happy to discuss further if you would like to connect with me.



Answered 8 years ago

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