Expensive Legal Mistakes that Scaling Coaching Businesses Make (with Autumn Witt Boyd)

The importance of clear contract for coaching businesses

Start off on the right legal foot with a clear contract for your clients or customers. Contracts are essential legal protection for your business, and almost all issues arise from unclear or inadequate contracts. A strong contract sets the foundation for success and positive relationships with clients.

A solid contract doesn't create a barrier between you and the client. It promotes a positive relationship by laying out all expectations and avoiding misunderstandings. Your contract should be easy to understand, written in plain English, with clear terms that set expectations for both parties. Legal jargon is necessary only for court enforcement. Your contract should be clear enough to answer client questions without needing to consult a lawyer.

Contracts should be fair to both sides to avoid setting off on uneven footing. This creates a positive relationship and makes it easier to enforce the contract. Ethical and fair-minded business practices help avoid client problems.

What should be included in your contract

It's important to periodically review your contract even if it's a "set it and forget it" type of contract. As an online business or coach, you may be constantly testing and tweaking your services. So, take some time to review your client contract and ensure that it includes the following key items, and that they are applicable to the current way you run your business.

This is not an exhaustive list of everything that could be in your contract, but these are some high points. If you offer payment plans other than pay-in-full, you need to specify them in your contract. Alternatively, if you're frequently changing payment plans and don't want to update your contract every time, you can include a term stating that the client agrees to the payment plan displayed on the sales or checkout page at the time of registration. However, you must keep a record of the plan for reference in case of any issues.

• A refund policy is crucial and should be clearly stated in your agreement. Many clients do not have a written refund policy, or it may be missing from their contract, which leaves them vulnerable to issues. Even if the refund policy is no refunds, it should still be explicitly outlined in the agreement. If you offer refunds under certain circumstances or have a 14-day money-back guarantee, it needs to be outlined in your contract. 
• Additionally, a termination policy is important to include, which outlines what happens if either party wants to end the agreement. This includes how prepayments or remaining payment plans are handled and whether access to any materials is still provided. It's important to consider whether advanced notice or written notice is required and whether there's a cancel button in your web portal.
• Consider adding community guidelines to your contract that not only specify what your client should do, but also what they cannot do. If you have a community for your coaching program, such as a Facebook group, it's highly recommended to have community guidelines in your contract to avoid drama. You can also list the guidelines on the community site, but having it in the contract provides a clear basis for removing someone from the community if they break the guidelines.
• In coaching client contracts, it's important to have a section on how clients can use your intellectual property. This includes curriculum materials such as videos, worksheets, or workbooks that are used in coaching programs. You should include clauses in your contract that specify what clients can and cannot do with these materials. For example, can they share them with others or use them with their clients? Protecting your intellectual property is crucial for scaling your business. Can they share them with a friend or use them with their clients? Like, can they use it in their own business? Can they post it on the internet? We want clear guidelines around that. 

The last thing to address is testimonials. Let's say I'm in Susie Q's coaching program and I put something in the Facebook group about how amazing her module was on scaling my business using Facebook ads. She copies and pastes it and puts it out publicly with my name and picture attached. Is that allowed? Address it in the contract to avoid questions later. Either get permission or anonymize it. Think ahead to avoid unhappy clients. With checkout pages like Amy Porterfield's, ensure two things in your client agreements.

Electronic signature for coaching businesses

An electronic signature is valid in the US and almost all contracts can be executed electronically. A checkbox at checkout is legally binding as long as the buyer has the opportunity to review the terms before agreeing and takes some affirmative action, such as checking a box or entering initials. It is not necessary to use DocuSign or individually send a contract to each client.

Two important things for a valid electronic signature are: the buyer should have the opportunity to review the terms before they agree, and they should take some affirmative action to show their consent. 

A clear refund policy and an earnings disclaimer are helpful to have on a checkout page. However, creating a proper earnings disclaimer may require the assistance of an attorney as there are specific rules to follow depending on what else is on the website page. The disclaimer should make it clear that results may vary and that individual effort is necessary.

Action step no.1: Terms of use

Your action step is to ensure that you have a solid contract to protect your business. If you don't have a contract yet, it's okay, but now that you have the knowledge, you should take action. To create a solid contract, you can work with a lawyer or purchase a template. This step is crucial for protecting your business, so don't overlook it. 

Action step no.2: Align your marketing with your delivery

Step two is ensuring that your marketing aligns with your delivery. This is particularly important as your business grows, and you may have other coaches, contractors, or team members helping with client delivery. To manage this, ensure that all aspects of your marketing, including your contracts, sales pages, emails, promotions, and webinars are cohesive and consistent. This will help prevent disappointed clients who can cause problems.

Disappointed clients may complain, ask for refunds, fail to pay, or even cause trouble in your community, but it's often because their expectations were not met. As the coach or service provider, it's your responsibility to set and reinforce clear expectations and remind clients that you're meeting them. This is how you avoid problems. To ensure you're delivering what you promised, consider the following tips.

Please check: your sales page, webinar slides, and any bonus offers for tracking and delivering promises. Consider using a Google Doc or checklist to ensure all deliverables are provided and easily accessible for clients. The more specific your promises, the more detailed your tracking system should be.

Encourage having a system in place to ensure you are delivering what you promised, with someone on your team responsible for checking regularly. Also, track client results as a defense against unhappy customers. This can include metrics like page views and revenue increase.

Evaluate how you track what was promised versus what was delivered, including your sales page, webinar slides, and bonuses. Create a system to track deliverables and ensure that a team member owns this process. Track client results to use as ammunition in case of unhappy clients. Be aware of the trend of "skinny offers" and avoid marketing them in a way that could lead to unhappy clients.

Action step no.3: Enforce your contract

Step three: Dealing with complaints. It's normal to have unhappy customers, and it's impossible to avoid completely, even with excellent service. You can try to satisfy them, but sometimes it's just not possible. To deal with this, you need to enforce your contract, which may feel uncomfortable, but it doesn't have to be complicated or overly legalistic.

How can coaching businesses deal with unhappy clients?

I encourage you to consider that you are in a negotiation when someone complains. They may be asking for something that's not what you agreed on, such as a refund, discount, or extra resources. Look at the contract as a starting point for what you promised. You can always be more generous than the contract requires, depending on the circumstances. For example, if a client is going through a tough time, you may choose to offer a refund, make an exception, or extend the program's time period.

You can offer extra coaching sessions or be more generous than what the contract requires. But remember, every exception you make sets a precedent, especially in group programs where people talk. If one person gets a refund despite the "no refund" policy, it can spread like a wildfire, leading to more unhappy clients. So, while you can be kind and fair, it's essential to keep your business's long-term interests in mind.

To build a sustainable business, it's important not to always make exceptions for unhappy clients as this can set a precedent and lead to more unhappy clients. If you do make exceptions, it may be helpful to have a policy in place to guide those conversations. In negotiations, it's important to think about leverage and get creative. Sometimes, what a client wants may not be related to the contract but something like recognition or exposure, so offering non-monetary incentives can also be effective.

Please keep in mind that threatening your clients is generally not a good idea. However, there are situations where you may need to enforce your contract and take legal action if necessary. It's important to know your rights and have a plan in place for dealing with difficult clients, but always approach the situation with professionalism and empathy.

To handle difficult situations, consider what you can offer to make them happy, as well as what you can threaten to do to make them unhappy. For example, you can offer to feature them on your website or podcast, or you can threaten to kick them out or report them to a credit bureau for non-payment or even choose to file a small claims lawsuit. However, threatening a lawsuit should be a last resort. If you make an exception to your normal terms, use a termination agreement to document the details of the agreement. 

Eventually, hire a lawyer if a dispute is causing you stress and worry. Lawyers deal with this stuff day in and day out and can save you time, worry, and money. It's normal to have unhappy clients, so congratulations, you're in the big leagues of business.

Key takeaways from this presentation

Having a clear contract is essential for any coaching business. Contracts are crucial for legal protection and avoiding misunderstandings between the coach and the client. A strong contract should be easy to understand, written in plain language, and fair to both parties. 

It should include important details such as payment plans, refund policies, termination policies, community guidelines, intellectual property rights, and testimonials. It's crucial to periodically review your contract to ensure that it reflects the current state of your business. 

Electronic signatures are valid, and a clear refund policy and earnings disclaimer should be included on checkout pages. To ensure that your business is protected, it's recommended to work with a lawyer or purchase a template to create a solid contract. 

By taking action and having a strong contract, coaching businesses can avoid potential legal issues and build positive relationships with their clients.