Agent Commission Contract

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Agent Commission Contract Powered By Docstoc
					Understanding the
Compensation Plan
The Nextage Compensation
          Plan
 3 Components of the plan:
   1. Franchisee Allocation
   2. Commission on Personal Production
   3. Sales Bonuses on Team Production
     a) Spread
     b) Generation
Gross Commission Income
vs Net Commission Income
 Gross Commission Income (GCI):
    Total amount of revenue generated
     to the company from a closed
     transaction side
 Net Commission Income (NCI):
    Amount of GCI left after deducting
      6 ½%
      $250 transaction fee
   GCI/NCI Example:

GCI            $10,000
   less 6 ½%     $650
   less $250     $250
= NCI           $9,100
  1. Nextage Franchisee
        Allocation
On every transaction side closed within
a Nextage franchisee’s company, the
franchisee receives:
   •   1.625% of the GCI
   •   $250 transaction fee
   •   3.5% of NCI
 Franchisee Allocation
      Example:
GCI                    $10,000
   less 6 ½%             $650
   less $250             $250
= NCI                   $9,100
Franchisee Receives:
   1.625% of GCI         $162.50
   Transaction fee       $250.
   3.5% of NCI           $318.50
Total                    $731.00
2. Commission on Personal
       Production
Commissions on personal production are based
on the broker’s/agent’s commission split & the
transaction’s NCI.
Commission splits range from 55% of NCI to
80% of NCI. Promotions to higher commission
splits are based on achieving certain levels of
production established by the franchisee.
The following chart provides recommended
promotion guidelines*.

*Benchmarks will vary depending on the marketplace in which the franchisee is located.
             Commission on Personal
                  Production
Split Percentage                Benchmark Requirements to be completed for
Payable to Sales                Promotion from Previous Commission Split Percentage
Associate                       Based on the Number of “Closed Transaction Sides”
                                Completed or “GCI” Generated in a rolling quarter.
                                Entry Split for Sales Associates New to the Business
           55%
                                (“Newbie’s”)
           65%                  3 closed “mentored” sides

           68%                  2 closed sides or $15,000 GCI in any rolling quarter

           71%                  3 closed sides or $22,500 GCI in any rolling quarter

           74%                  4 closed sides or $30,000 GCI in any rolling quarter

           77%                  5 closed sides or $37,500 GCI in any rolling quarter

           80%                  6 closed sides or $45,000 GCI in any rolling quarter
Benchmarks will vary depending on the marketplace in which the franchisee is located.
Commission on Personal
  Production Example
GCI                         $10,000
   less 6 ½%                  $650
   less $250                  $250
= NCI                        $9,100

Agent’s commission split:      74%
$9,100 x 74%                 $6,734
3. Sales Bonuses on Team
        Production
Sales bonuses are paid to the upline Team
Leaders of a broker or agent who close a
transaction side.
Sales bonuses are based on the upline Team
Leader’s Leader Contract level and the
transaction NCI.
Leader Contract levels and requirements for
promotion from one level to the next are as
follows (all production is based on a rolling
quarter):
       Sales Bonuses on Team
             Production
Nextage            Leader     Requirements for                 Additional
Leader             Contract   promotion from previous          promotion
Contract           Percentage level                            requirements
Sales Consultant               Entry Level
                      55%
(SC)
Sales Director                 1 closed side – individual or   1 Active Nextage
                      65%
(SD)                           Team                            agent
Senior Sales                   5 team closed sides or          2 direct active agents
                      68%
Director (SSD)                 $37,500 GCI (rolling ¼)         and 5 team agents
Regional Sales                 15 team closed sides or         3 direct active agents
                      71%
Director (RSD)                 $112,500 GCI (rolling ¼)        and 15 team agents
Divisional Sales               30 team closed sides or         4 direct active agents
                      74%
Director (DSD)                 $225,000 GCI (rolling ¼)        and 30 team agents
National Sales                 50 team closed sides or         5 direct active agents
                      77%
Director (NSD)                 $375,000 GCI (rolling ¼)        and 50 team agents
Executive Sales                80 team closed sides or         6 direct active agents
                      80%
Director (ESD)                 $600,000 GCI (rolling ¼)        and 80 team agents
3a. Sales Bonuses on Team
  Production – “Spread”
A “spread” sales bonus is earned when the
recruiter of an agent who closes a
transaction side has a higher Leader’s
Contract than the agent’s commission split.
Example:
  –   Sally recruits Tim
  –   Sally has a Leader’s Contract of 80%
  –   Tim has a commission split of 68%
  –   When Tim closes a transaction, Sally earns a 12%
      “spread” sales bonus
Diagram of Previous Example


     Sally – ESD (80%)
     Leader’s Contract
                         12% spread
                         (80% - 68%)
     Tim – 68%
     Commission Split
      Sales Bonuses on Team
       Production – “Spread”
The “spread” continues throughout the entire
hierarchy as long as a difference in the upline
Leader’s Contract and the agent’s commission
split exists.
Example:
  –   Sally recruits Tim and Tim recruits Jerry
  –   Sally has a Leader’s Contract of 80%
  –   Tim has a Leader’s Contract of 74%
  –   Jerry has a commission split of 68%
  –   When Jerry closes a transaction, Sally earns a 6%
      “spread” sales bonus & Tim earns a 6% spread sales
      bonus.
Diagram of Previous Example
     Sally – ESD (80%)
     Leader’s Contract
                         6% spread
                         (80% - 74%)
     Tim – DSD (74%)
     Leader’s Contract
                         6% spread
                         (74% - 68%)
     Jerry – 68%
     Commission Split
Other Examples
Sally – ESD (80%)
Leader’s Contract
                    6% spread
                    (80% - 74%)
Tim – DSD (74%)
Leader’s Contract
                    6% spread
                    (74% - 68%)
Jerry – SSD (68%)
Leader’s Contract
                    3% spread
                    (68% - 65%)
Diane – 65%
Commission Split
Other Examples
Sally – ESD (80%)
Leader’s Contract
                    6% spread
                    (89% - 74%)
Tim – DSD (74%)
Leader’s Contract

Jerry – SD (65%)
                    3% spread
Leader’s Contract   (74% - 71%)


Diane – 71%
Commission Split
3b. Sales Bonuses on Team
 Production – “Generation”
A “generation” is created when both the upline
Team Leader and the agent have Leader
Contracts of at least 65% (Sales Director).
Example:
  –   Sally recruits Tim
  –   Sally has a Leader’s Contract of 80%
  –   Tim has a Leader’s Contract of 65%
  –   Tim is Sally’s first generation
  –   Sally will earn a first generation sales bonus in
      addition to a spread sales bonus on Tim’s
      production
Diagram of Previous Example


                    Sally – ESD (80%)
                    Leader’s Contract
   1st Generation




                                        12% spread

                    Tim – SSD (68%)
                    Leader’s Contract
 Generation Sales Bonus Plan
Generation Level   % Sales Bonus paid to Team Leader

      1st                    7 ½% of NCI

      2nd                    3 ¾% of NCI

      3rd                    2 ¼% of NCI

      4th                     ½% of NCI

      5th                     ¼% of NCI

      6th                     ¼% of NCI
      Generation Sales Bonus
             Example
Example:
  –   Sally recruits Tim
  –   Sally has a Leader’s Contract of 80%
  –   Tim has a Leader’s Contract of 55%
  –   Tim is NOT Sally’s first generation
In this example, Sally will earn a “spread”
sales bonus but not a generation sales
bonus
Diagram of Previous Example


            No Generation   Sally – ESD (80%)
                            Leader’s Contract
                                                25% spread

                            Tim – SC (55%)
                            Leader’s Contract

Note: Tim only has to recruit 1 agent and have 1 closing
(personal or Team) to advance to the Sales Director level.
Then he will become Sally’s first generation.
  Sales Bonuses on Team
 Production – “Generation”
The commission split of the agent closing a
transaction is considered to be his/her Leader’s
Contract on that particular transaction.
Example:
  –   Sally recruits Tim and Tim recruits Jerry
  –   Sally has a Leader’s Contract of 80%
  –   Tim has a Leader’s Contract of 74%
  –   Jerry closes a transaction & has a 55% Leader’s
      Contract but a 68% commission split
  –   Jerry is considered to be Tim’s first generation &
      Sally’s second generation
  –   Both Sally & Jerry earn generation sales bonuses
      Diagram of Previous Example
                      Jerry closes a transaction personally:

                                        Sally – ESD (80%)
                                        Leader’s Contract
                                                            6% spread
     2nd Generation




                                        Tim – DSD (74%)
                       1st Generation




                                        Leader’s Contract
                                                            6% spread
                                        Jerry – 68%
                                        Commission Split

Even though Jerry only has a Sales Consultant Leader’s Contract, since he is
the selling agent in this transaction he is considered to be a Sr. Sales Director.
                                     Other Examples
Diane, Jerry’s only recruit, has a closing – Jerry’s 1st:

                                     Sally – ESD (80%)
                                     Leader’s Contract
                                                         6% spread
                                     Tim – DSD (74%)
   2nd Generation




                                     Leader’s Contract
                    1st Generation




                                     Jerry – 55%
                                                         3% spread
                                     Leader’s Contract

                                     Diane – 71%
                                     Commission Split
                Other Examples
Because Diane had a closing, Jerry becomes a Sales Director:

               Sally – ESD (80%)
               Leader’s Contract
                                         6% spread
               Tim – DSD (74%)
               Leader’s Contract

               Jerry – 65%
                                         3% spread
               Leader’s Contract

               Diane – 71%
               Commission Split
                                                   Other Examples
As a Sales Director, Jerry earns a 1st Generation Sales Bonus:

                                                   Sally – ESD (80%)
                                                   Leader’s Contract
                                                                       6% spread
                                                   Tim – DSD (74%)
3rd Generation




                                                   Leader’s Contract
                 2nd Generation




                                                   Jerry – SD (65%)
                                                                       3% spread
                                  1st Generation




                                                   Leader’s Contract

                                                   Diane – 71%
                                                   Commission Split

				
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