Freelance friend wants to join my agency: How to structure scope of work and revenue sharing?

When putting the contract together, make sure you nail down these three points: 1) Distinguishing between clients your friend brings in vs. your existing book of business, plus how long client ownership lasts. 2) The fixed hourly or module-based cost of each discipline on bundled gigs. 3) How cash flow risk gets split if a client defaults or pays late.

We used a similar setup: a 20% sales commission, 50% for fulfillment, and 30% toward agency overhead. For instance, on a $4,000 social media and ads retainer, whoever landed the account took $800, my partner handling fulfillment took $2,000, and the remaining $1,200 went toward software and office overhead. We haven't had a single disagreement in three years.

Asking for company equity right off the bat seems way too premature. You're pulling in $95,000 solo with a functioning operation. Sounds like your friend might just want a piece of an already profitable business without taking on any of the risk. Don't even think about handing over official equity until you've worked together on a few projects under a subcontractor agreement.

Lay out your service catalog in a spreadsheet. Put a fixed base price and the designated founder next to each service. Stick to those ratios when selling bundles too, so no one can come back later claiming "I worked harder on this."

What happens if a client is unhappy with the service and terminates the contract or demands a refund? Does your friend pay back their share or does the loss fall entirely on you as the agency owner?

Doing business with friends is always a double-edged sword; the slightest money issue can ruin the friendship and kill the agency. honestly get everything in writing from day one and sit down like corporate partners—don't cut corners just to be nice to a friend.

The general consensus is pretty clear: it's way too early to grant actual equity. Define your deliverables with unit pricing first, split revenue proportionally on bundled projects, and trial your friend on a revenue-share model for at least six months.

Absolutely... If I were to add anything: People defend habits not processes... Resistance comes from there.

Proven by experience.

I partly agree partly disagree. honestly start with a small trial; don't commit to everything at once.

Correct me if I'm wrong.

The cheap-looking path usually ends up costing more later. If IP assignment to the company isn't written from the start, it can't be collected later.

Good luck with that.

There is something to watch out for. If decision-making authority isn't defined, it causes daily issues, not just during exits.

Just leaving this note, it might be useful.

Correct.

There is something to watch out for. Solutions that work at a small scale collapse when you grow; I learned this late.

Absolutely. If I were to add anything: Valuation methods for exits must be defined by formula; "market value" isn't enough.

If you have questions, write them; I'll answer as best I can.

i've been dealing with this for a long time but tbh any unwritten clause becomes a point of disagreement later, as both sides remember it differently.

hope this helps.

Thanks for writing this, that's the right way. Solutions that work at a small scale collapse when you grow; I learned this late.

Trying to do this alone is the most expensive way. Good luck with that.

I think differently. Everyone rushing into agency scope of work gets stuck at the same point.

Give trial work but pay for it; free trials don't bind anyone. Of course, it varies if your situation is different.

I partly agree, partly disagree. If it's your first time, start small; scaling comes later.