Good News! We just closed another deal! But, it required a lot of effort. As it should.
This week my colleague David, and I closed a deal to help a new client plan and build a ten-store territory for a California-based franchised restaurant concept. This is a complicated assignment as it involves a family in various stages of immigration to the U.S. and inexperienced operating partners. Nevertheless, it is a fascinating opportunity and we are happy to participate. We even provided our prospects with referrals to attorneys who will help them with immigration issues, offshore financing, and finalizing the franchise agreement. During a meeting this week, David and I clarified the remaining details to begin our work, including the retainer.
The genesis of this project was late Spring when David invited me to a meeting with the prospective clients. As this was a referral from their Attorney, who we both know, it seemed like a viable investment of our time. Prior to that meeting, David explained that the prospects were interested in buying a franchise of an Oriental restaurant concept. That was the extent of his brief, based on information from the Attorney. David brought this opportunity to me because he lacks a background in restaurant franchising. He thought I could help him close the deal and to collaborate on the project. We were clear that if we closed the deal, David would be the lead consultant and I would play a supporting role. Based on our contractual agreement, David is entitled to a referral fee from me, a percentage of my earnings from the project. This point was clear before our first meeting with the client. This is how we work together.
Subsequently, we had several meetings with the client to learn the details of their plans and to establish mutual respect. As with many projects, the prospective client’s circumstances changed which affects the scope of the project. In this case, the scope has grown significantly requiring modification to our proposal. Over the Summer, the prospective clients became disenchanted with their lead opportunity and began searching for an alternative, including the acquisition of a going concern. Additionally, a brother and his family, the principal financiers for this project, decided to begin the process of immigrating to the U.S. This increased the scope of our work as we will interface with the Immigration Attorney to help her complete her work. The good news is that David and I have established our bona fides, and have developed a good rapport with the client. We scheduled to meet with them one more time to finalize our agreement and scope of work. That meeting occurred this week.
Our next step is to plan the “kick-off” meeting with the client and their attorneys. We also finalized our fee splitting arrangement. To that point, the client requires a flat fee for our services. Our proposal for the first part of the assignment, Phase I, is a flat fee, paid in advance. It also specifies the number of man-hours anticipated to complete Phase I, the planning phase. As a result, David and I have a defined hourly rate for our services, the basis for the referral fee. David will collect and escrow the engagement fee for Phase I. We agreed to track our hours and make a settlement each week. I will receive our hourly rate times my weekly hours, less 10% of that sum. Simple enough.
Before this deal closed, David and I established our working relationship and formalized our financial arrangement. This is how we work together. It is the foundation for trust and respect. People new to freelance consulting often have difficulty on joint assignments because they begin without this foundation. This is a stumbling block that creates difficulty completing the assignment. It is probably a combination of inexperience and ignorance, however, it is a major detriment to a successful working relationship.
David and I have collaborated on a number of assignments, so our process is well defined. This is something our new consultants must learn as it hasn’t been a part of their career experience.
Thank you for visiting my blog. I hope you enjoyed my point of view and would like to receive regular posts directly to your email inbox. Toward this end, put your contact information on my mailing list. Your feedback helps me continue to publish articles that you want to read. Your input is important to me so; please leave a comment.
Jim Weber, Managing Partner
Jim.Weber@itbpartners.com
Author of: Fighting Alligators: Job Search Strategy For The New Normal
Current Assignments
1. COO- Atlanta-based Casual Dining Restaurant Company – New
2. Controller – Atlanta-based Consumer Products – Digital Company – Completed
3. Director of Biz Dev, Atlanta-based B2B Professional Services Company: Completed
4. Payroll-Benefits Manager, Atlanta-based Retail Company: Complete
5. Senior Accounting Manager – Atlanta-based Manufacturer. Complete
6. Controller – Atlanta-based Restaurant Company: New