FREIGHT BUSINESS MODELS

Read the Agency Agreement Before You Sign It: Customers, Restrictions, Indemnity and Exit Terms

A practical contract test for the customer, money, claim, exit, and dispute terms behind the advertised commission split.

Freight Broker Agency Series · Part 2 · Published August 26, 2026 · Last reviewed August 26, 2026 · 17 min read

By Freight Decision Lab

A freight broker agency offer can sound simple. The brokerage provides the authority and infrastructure. You bring the customers. You get a percentage of the gross profit. That may be a very good deal.

But the split is one line in a contract that determines much more than how much you get paid. The agreement can decide which customers you may pursue, when a commission is actually earned, what can be charged back later, who absorbs certain losses, what happens when a claim occurs, what restrictions survive after you leave, and whether any commission follows you out the door.

So stop asking only:

What’s the split?

Ask:

What happens to my business when something goes wrong or the relationship ends?

There is a practical way to read the agreement. Put it through five situations. If you cannot explain what the contract does in all five, you do not understand the deal yet.

Situation 1: You bring in the customer

Suppose you open an agency and bring in a shipper. You make the call. You win the first load. You grow the account. Two years later it is one of the largest customers in your business.

Whose customer is it?

People in freight often say “customer ownership,” but contracts usually get more specific. Can the brokerage reject the customer before you start? Does the account have to be registered or approved? What if another branch or agent already contacted the same company? Does protection cover one facility or the entire corporation? Can another part of the brokerage sell into that account? What happens if the customer goes dormant?

And most important: What happens to that relationship if you leave?

A publicly filed 2022 Broker Agent Agreement involving Freedom Freight Solutions shows how specific this can get. In that agreement, customers had to be identified by the agent and accepted by the broker before being added to the customer schedule. The broker retained the right to reject customers and shipments, and commissions applied only to approved customers covered by the agreement or later written additions.

That is one contract. It is not an industry standard. The point is simpler: Bringing the relationship does not automatically mean the contract treats the relationship as yours.

Separate the customers you bring from the customers you build there

If you enter the agency with existing relationships, identify them before you sign. If the agreement uses a protected-account schedule, customer appendix, or similar document, put the actual names on it.

Do not rely on:

“Everybody knows that’s your account.”

Three years later, the people who “know” may not work there anymore. Put the operating reality in writing.

Situation 2: The customer does not pay

Now assume that customer moves a lot of freight. You generate GP. You receive commission. Then the receivable goes bad.

What happens to your money?

Agency recruiting tends to talk about how quickly commissions are paid. The agreement tells you whether those commissions are final. That is the more important question.

Look for:

when commission is earned;
when it becomes payable;
whether payment depends on customer collection;
bad-debt provisions;
credit-limit violations;
offsets;
reserves;
claims;
deductions;
chargebacks;
and how far backward the brokerage can reach.

The public Broker Agent Agreement reviewed for this article provided for monthly commission payments. But if a freight bill on which commission had already been advanced remained unpaid after 90 days, the broker could recover 100% of that commission through deduction or repayment. The agreement also gave the broker offset rights against other money owed to the agent.

Again, your contract may be different.

The credit policy can matter more than a few points of split

Suppose you land the account of your career. The customer wants $250,000 of monthly credit. The host approves $75,000.

Now what?

Can the agency stop moving freight beyond the limit? Can the host change the limit? Can you request an increase? What happens if you keep moving loads after credit approval is withdrawn? Who carries the loss?

If the brokerage provides the customer credit, it is taking real financial exposure on freight you generate. That is part of the infrastructure you are paying for through the host’s share.

A 70% split under weak credit support can be worth less than a lower split under a brokerage that can safely support the customers you are capable of winning. The contract connects those two things.

Situation 3: A serious claim occurs

This is where contract language that looked like boilerplate suddenly matters. Find two words: indemnification and insurance.

They are not the same thing. Insurance asks what a policy may cover. Indemnification asks when one party has agreed to defend, reimburse, protect, or hold the other harmless from certain claims or losses.

Read the clause. Who indemnifies whom? Is it mutual? Does it apply only to contract breaches? Does it reach negligence, carrier selection, employees, independent contractors, unauthorized representations, or attorneys’ fees? Does it survive termination? Who controls the defense? Can one party settle a claim and charge the other?

These questions became more important on May 14, 2026. In *Montgomery v. Caribe Transport II, LLC*, the U.S. Supreme Court held that the FAAAA did not preempt the negligent-carrier-selection claim at issue because the statute’s safety exception applied.

That does not mean every broker is automatically liable when a motor carrier crashes. Justice Kavanaugh, joined by Justice Alito, wrote separately that brokers who act reasonably and select reputable carriers should still be able to defend these claims.

The practical point for an agency is straightforward: Process and documentation matter, and the contract determines how risk may move between you and the host.

Before signing, answer:

What carrier-selection process must I follow?
What happens if I do not follow it?
What insurance does the host actually maintain?
Am I insured under any relevant policy?
What insurance must my agency carry?
What liabilities am I agreeing to reimburse?

The public Broker Agent Agreement reviewed for this article required the agent to maintain specified insurance at its own expense, name the broker as an additional insured for certain coverage, and indemnify the broker for broad categories of losses tied to the agent’s acts, omissions, and breaches.

Your agreement may look nothing like that. Find out before there is a claim. For indemnity and insurance language, qualified legal and insurance review is worth paying for before the dispute exists.

Your contract does not make the outside claim disappear

There is another distinction people miss. The agency agreement governs the relationship between you and the host. A third party injured in an accident is not necessarily limited by the way you and the brokerage agreed to divide responsibility internally.

The contract can affect who ultimately owes what between you and the host. It does not erase whatever rights an outside claimant may legally have.

That is why “the brokerage has insurance” is not enough. You need to know who is insured, what is covered, what is excluded, and which conduct can trigger indemnity back against the agency.

Situation 4: Your settlement looks wrong

You expected $18,000. The statement shows $14,700.

Now what?

This is when a vague commission clause becomes expensive. If the agreement says you receive 65% of GP, ask: How does the contract define GP?

Customer revenue minus carrier cost? Does it deduct claims, customer credits, insurance charges, technology, operations support, bad debt, accessorial losses, shared services, or other adjustments? Do not assume your normal freight definition of GP is automatically the contract definition.

Then check the mechanics. How often are statements issued? What supporting detail do you receive? Can you see the customer sell and carrier buy? What happens with later adjustments? How long do you have to dispute a statement? Is there an audit right? Does silence mean acceptance?

The public agreement reviewed for this article gave the agent 60 days to dispute commission calculations in writing. Claims after that window were waived.

If your agency is doing hundreds of loads a month and nobody reconciles settlements, that can become a real problem. A serious agency needs a settlement-review process. Not because the host should be presumed dishonest. Because mistakes, adjustments, claims, credits, and accounting disagreements happen.

Accessorials can change agency economics too

Detention. Layover. TONU. Reconsignment. Recovery costs. Customer concessions. Carrier adjustments.

How do those affect your commission?

Suppose the customer pays $500 detention and the carrier receives $400. Is the $100 commissionable GP? Suppose the carrier earns a layover and the customer refuses to pay it. Who absorbs the loss? Suppose the agent promises an accessorial beyond the brokerage’s approved amount. Who pays the difference?

These are operating questions with contractual consequences. The public agreement reviewed for this article made the agent responsible for certain unauthorized costs. That is why you cannot evaluate an agency from the headline split.

Situation 5: You leave

Spend serious time here. Not because you expect the relationship to fail. Because a good contract should explain a successful exit too.

Imagine you spend five years building the agency. The book produces $1.5 million in annual GP. You have employees. Your largest customer has been with you since day one. Then you decide to leave.

Maybe you want your own authority. Maybe another brokerage makes a better offer. Maybe ownership changes. Maybe the host is acquired. Maybe the relationship simply no longer works.

What happens the next morning?

Start with termination

How much notice is required? Can either side terminate without cause? Can the brokerage terminate immediately for certain conduct? Is there a cure period? What happens to loads already booked? What happens to freight still moving? What happens to receivables collected later?

Find the commission tail

What happens to customers who keep shipping after you leave? Do you receive anything? For how long? Only for freight booked before termination? Only for freight delivered before termination? Only after the customer pays? Nothing at all?

One publicly filed agreement reviewed for this article ended the agent’s commission rights on shipments booked after termination. Other contracts can be different. Do not assume.

If you spend years building a valuable book, the answer can be worth a lot of money.

Then read every restriction that survives

Customer nonsolicitation. Employee nonsolicitation. Noncompetition. Confidentiality. Trade secrets. Carrier information. Pricing data. Customer contacts. System data.

The fact that a restriction appears in a contract does not automatically tell you whether every part of it is enforceable. And do not assume federal law wiped these issues away.

The FTC’s nationwide Noncompete Rule is not in effect and is not enforceable. Restrictive-covenant law still varies significantly by state, and customer nonsolicitation provisions may be treated differently depending on the jurisdiction and wording.

That makes two clauses easy to ignore and expensive to discover later: governing law and venue.

The public agreement reviewed for this article selected Indiana law and specified Indiana courts for disputes. If you run your agency in Arizona but the contract puts the fight in Indiana, that matters. If the agreement requires arbitration, that matters too.

Read those clauses before there is something worth fighting about.

“I brought the customer” is not an exit plan

This deserves to be said plainly.

“That’s my customer. I brought them.”

Maybe that matters. Maybe the contract protects the relationship. Maybe it does not. Maybe the customer contract sits with the host. Maybe a nonsolicitation clause limits what you can do after termination. Maybe a prior employment agreement matters too.

There can be several contractual relationships around the same customer. Do not reduce all of them to “my customer.”

If you bring existing relationships into the agency, identify them in writing and make the contract address them. If the recruiting pitch says one thing and the contract says another, believe the contract.

A real public agreement shows how much can sit behind the split

ONE PUBLIC EXAMPLE · NOT A TEMPLATE

What appeared behind the percentage

This 2022 SEC-filed agreement is a transaction-specific illustration. Its terms are not presented as standard, recommended, representative, or enforceable everywhere.

Customer: Customer approval and commission eligibility
Money: Monthly settlements, repayment on certain unpaid freight, offsets, commission holds, a 60-day dispute window, and certain unauthorized costs
Risk: Insurance requirements, confidentiality, and indemnification
Exit: Post-termination restrictions, a five-year customer nonsolicitation period, termination, loss of commission on later-booked shipments, governing law, and venue

That is one agreement. It is not an industry template. It is useful because it destroys the idea that an agency contract is simply:

Brokerage gets 30%. Agent gets 70%.

The split fits on one line. The business does not.

Stop negotiating the split for a minute

The percentage matters. But if you do not know who controls the customer, what can be charged back, what you indemnify, what happens when you leave, and whether you keep any commission afterward, arguing over 65% versus 70% is premature.

I would settle these first:

Customer rights.
Commission definition and chargebacks.
Indemnity and insurance.
Post-termination restrictions.
Post-termination commissions.
Termination rights.
Governing law and dispute process.

A great split cannot rescue a bad underlying agreement.

The Freight Decision Lab contract test

Before signing, you should be able to answer five areas without guessing.

THE FDL CONTRACT TEST

Five areas. No guessing.

01
Customer
- Which customers can I pursue?
- How are conflicts handled?
- Which relationships am I bringing in?
- What rights do I retain?
- What happens if another part of the brokerage works with the same company?
02
Money
- Exactly what is my percentage applied to?
- When is commission earned and paid?
- What can be deducted or charged back?
- How long do I have to dispute a statement?
03
Claim
- What am I responsible for?
- What does the indemnity clause require?
- What insurance applies and what must I carry?
- What carrier-selection and documentation rules must I follow?
04
Exit
- How does termination work?
- What happens to open freight and receivables?
- Do any commissions continue?
- Which restrictions survive?
- What happens to customer and system data?
05
Dispute
- What law governs and where does a dispute happen?
- Court or arbitration?
- Can policies affecting economics change without an amendment?
- What records will exist if the two sides disagree?

If you cannot answer those questions, keep reading. If the contract does not answer them, ask. If the recruiting explanation and the agreement conflict, the agreement deserves more weight.

The brokerage should run the same test in reverse

The host should be asking hard questions too. Can this agent bring in legitimate business? Can they operate what they sell? Will they follow carrier-selection requirements? Can they stay inside customer-credit rules? Do they understand what they are allowed to promise? Will their documentation hold up when something goes wrong? Does the agreement clearly define what happens to open freight, customers, claims, and data if the relationship ends?

The brokerage’s authority, reputation, insurance, credit, carrier relationships, and operating systems are now connected to the agent’s decisions. A strong agreement helps. A strong selection process helps earlier.

If you recruit, onboard, or manage freight agents, See the Team Approach.

Operating principle

Understand customer rights before the customer becomes valuable. Understand chargebacks before the invoice goes bad. Understand indemnity before the claim. Understand the nonsolicit before you want to leave. Understand termination while both sides still expect the relationship to work.

That is not pessimism. That is business.

Continue the Freight Broker Agency Series

Part 3 will break down what an agency actually has to generate in GP, loads, customers, and operating capacity before the advertised percentage becomes meaningful income.

Get The Freight Decision

Sources and currency

This article was researched and reverified against sources current as of August 26, 2026.

Primary and authoritative sources reviewed for this article include:

The publicly filed agreement is used to show the types of provisions that can appear in an agency contract. It is tied to a specific transaction and is not presented as an industry standard, recommended form, or representative market agreement.

Agency agreements, restrictive covenants, indemnification provisions, insurance obligations, commission rights, and enforceability vary by contract and jurisdiction. Freight Decision Lab provides educational decision frameworks, not legal advice. An actual agency agreement should be reviewed by qualified legal and insurance professionals appropriate to the agreement and jurisdictions involved.

Better Decisions. Better Freight.

Freight Decision Lab