FDD Fransource International - To Be Formed Entity
Drumm Law Engagement Letter for
Thank you for choosing Drumm Law, LLC to serve as your counsel. Please review this Engagement Letter and the attached Terms and Conditions. If you have any questions, please let us know. Otherwise, please sign the Engagement Letter. We are pleased to have the opportunity to work with you.
Our client is the entity that is listed in the signature block of this Engagement Letter and not any individual organizer, owner, member, manager, officer or director of that legal entity. It is important that you understand that the corporate interests may not always be identical to the interests of the organizers, owners, members, managers, officers or directors and that the interests of any such individual may not always be identical to the interests of the other individuals. Therefore, each organizer, owner, member, manager, officer and director should carefully consider retaining independent counsel to provide separate advice and representation.
Franchise Disclosure Document Preparation
The scope of our work will involve preparing a Franchise Disclosure Document (“FDD”) meeting the pre-sale disclosure requirements of the FTC Rule. The FDD is the “disclosure document” which applicable law requires a franchisor to deliver at least 14 calendar days before the prospect signs any contracts or pays any consideration for the franchise.
We have agreed to draft the FDD, franchise agreement, area development agreement (if applicable) and all standard franchise contracts (the “FDD Preparation”). We will also provide reasonable consultation and advice to your accountants on preparation of the required financial statements and provide reasonable consultation to you regarding your FDD and related documents during the drafting period until the completion of the FDD.
Other Legal Services
In addition to the FDD Preparation described above, we also may provide any additional services requested by you and expressly agreed to by us in writing for additional fees. These may include:
* Assisting with trademark ownership issues, corporate structure and intellectual property licensing issues. * Special or additional projects that you ask us to undertake, including trademark filings, corporate entity formation or projects not related to the drafting of the FDD.
We will open a general billing number and charge that account for the legal services that we render on an hourly basis so that we can keep track of our time separate and apart from FDD Preparation. All fees and costs will be separately itemized and billed in accordance with our normal procedures. Once we complete the FDD Preparation, any other legal services which we render will be billed on an hourly basis (in accordance with our standard billing procedures) or flat fee basis (if we have agreed in writing to an additional flat fee arrangement). For example, we are available to review advertising and marketing materials soliciting prospective franchisees, to review your operations manual to verify their conformity to the franchise program described in your contracts, to address operating and relationship issues as they arise, and other matters that arise during the course of selling and administering franchises.
The fee for the FDD Preparation outlined in the above Legal Services section will be paid by FranSource International, Inc. However, our ethical obligation and duty of loyalty and confidentiality are to you. You are our client. Any additional work (other than the FDD Preparation) will be billed directly to you.
Our billing rates for our attorneys vary according to the experience of the individuals. The rates for our attorneys currently range between $295 to $475 per hour and paralegals are $175 per hour. Hourly rates are subject to change from time to time to reflect current levels of legal experience and other factors. We record our time in units of tenths of an hour. We view such rates as a benchmark, and not as the sole determining factor for the value of our services for billing purposes. The amount of our billing statement will be the fair value of the services as determined by the billing attorney, taking into account the time records for the matter, the types of services we have been asked to perform, any special level of experience required, the size and scope of the matter, results obtained and other relevant circumstances. In accounting for the hours attributable to an assignment, the billing attorney will also take into consideration efficiencies and value resulting from the firm’s technology and other resources that provide benefit to the client that is greater than would be reflected in the hourly rate of the individual attorney involved.
*If our representation terminates before completion of any fixed flat fee services (or between completion of any increment of the fixed flat fee services, if applicable), you will pay, and we will be entitled to, the portion of the fee earned up to the time of termination. The fee will be based on our current hourly rates for the number of hours conducted by us on the specific fixed flat fee services (or increment, if applicable) up to the date of termination. However, the fee will not exceed the amount that would have been earned had our representation continued until the completion of the fixed flat fee services (or any increment, if applicable).
In addition to legal fees, you will be billed for all costs and expenses incurred in the course of our representation, such as shipping charges, printing costs and filing fees. We may require an additional retainer before we incur expenses on your behalf.
We may ask for a retainer in the future for certain projects. This retainer would be held and used as a security deposit until the matter to which our representation relates concludes and would be applied to payment of your final invoice for all outstanding costs, expenses, and fees for legal services. However, at our option, we may choose to apply the retainer to your monthly invoices for costs, expenses and fees for legal services, and you hereby authorize us to withdraw sums from the trust account to pay such amounts. If we apply the retainer to your monthly invoices, we may require you to replenish the retainer. Any requested retainer is not an estimate or reflection of what the total costs, expenses and fees for legal services will be and you are responsible for all amounts owed above the retainer. Any of the retainer not used for costs, expenses, and fees for legal services, if any, will be refunded to you when our representation in the matter(s) described above conclude. The retainer will be deemed fully earned for any fixed flat fee when the legal product or service has been delivered.
Third Party Disclosure
As attorneys, we have a strict professional duty to maintain confidentiality with respect to our representation of a client. However, with your consent or if disclosure is impliedly authorized in order to carry out our representation, then we may reveal information obtained in the course of representation to third parties. Your signature on this letter authorizes us to reveal all necessary information to FranSource International, Inc. related to the preparation of your FDD. You may revoke this authorization at any time by providing us written notice.
Because there is generally a time lag between the performance of our services and the invoicing of those services, your billing statements are due and payable upon receipt. We ask and expect payment of our invoices on a current basis, as delayed payment adds to our overall costs of providing services. Invoices are generally sent out monthly for the previous month’s fees and expenses. Unless we have made other arrangements, if an invoice is not paid within 15 days after the statement date, interest will be charged on the principal balance (fees, costs and expenses) shown on the invoice. Interest will be calculated by multiplying the unpaid balance by the periodic rate of 1.5% per month. The unpaid balance will bear interest until paid. Should invoices not be paid on a timely basis, we reserve the right to suspend providing professional services or to withdraw from representation, subject to any applicable legal-ethics constraints. In addition, by signing this Engagement Letter client agrees that Drumm Law, LLC shall withdraw from this representation immediately and cease all work and billing should client enter bankruptcy proceedings of any type.
Drumm Law, LLC is a law firm which has represented, and continues to represent, many different corporate and individual clients with various business interests in numerous industries. You agree that, subject to our professional responsibilities, we may represent any other company operating in your same industry, even if that company is a direct competitor of yours. It is possible that, during the time we are representing your interests in this matter, you may become involved in transactions and/or disputes in which your interests are adverse to those of one of the firm’s present or future clients. If such a conflict were to arise between your interests and those of another present or future client of the firm, the firm will apprise you of that fact, but reserves the right to represent the interests of the other client with respect to that particular matter.
Therefore, as a specific condition to our undertaking your representation, you understand and agree that this firm may continue to represent or may undertake in the future to represent existing or new clients in any matter that is not substantially related to our work for you even if the interests of such clients in those other matters are directly adverse. We agree, however, that your prospective consent to conflicting representation contained in the preceding sentence shall not apply in any instance where, as a result of our representation of you, we have obtained proprietary or other confidential information of a nonpublic nature, that, if known to such other client, could be used in any such other matter by such client to your material disadvantage.
TERMS AND CONDITIONS
LEGAL FEES AND EXPENSES
To help us determine the value of our services, we maintain time records for each client and matter. The billing attorney assigned to you reviews the time records before a statement is rendered. All attorneys of the firm are assigned hourly rates, which rates are reflected on the monthly time records, unless you and the firm have agreed to a fixed fee for a project in which case the fixed fee will be shown on the statement.
We will charge for all time spent in representing your interests, including by way of illustration: telephone and office conferences with clients, representatives of clients, opposing counsel; conferences among our legal and paralegal personnel; factual investigation; legal research; responding to your requests for us to provide information to your auditors in connection with review or audits of financial statements; drafting letters and other documents.
We are able to provide a binding estimate for some legal projects or complete projects on a fixed fee basis. We do not provide invoices detailing the specific time and specific descriptions for fixed fee services. If our representation terminates before completion of the fixed fee services (or between completion of any increment of the fixed fee services, if applicable), you will pay, and we will be entitled to, the portion of the fee earned up to the time of termination. The fee will be based on our current hourly rates for the number of hours conducted by us on the fixed fee services (or increment, if applicable) up to the date of termination. However, the fee will not exceed the amount that would have been earned had our representation continued until the completion of the fixed fee services (or any increment, if applicable). Feel free to reach out to us to discuss any projects and we can provide this estimate to you prior to the project start. If you ever have an issue with an invoice, do not hesitate to contact us so that we may explain and, if necessary, adjust the invoice to meet your expectations.
In addition to legal fees, you will be billed for all costs and expenses incurred in the course of our representation, such as shipping charges, printing costs and filing fees. These expenses may include a reasonable handling fee.
You agree that our legal services will be limited to the scope of work outlined in the engagement letter. If you request that we perform legal services beyond this scope of work, and we agree in writing to perform such work, you agree that such work will be in addition to the scope outlined above and shall be billed at our then-prevailing hourly rates or fixed rate service fees, whichever is applicable.
ENTITY AS CLIENT
If you are an entity, your legal entity will be our client and not the any individual organizer, owner, member, manager, officer or director of that legal entity. It is important that you understand that the corporate interests may not always be identical to the interests of the organizers, owners, members, managers, officers or directors and that the interests of any such individual may not always be identical to the interests of the other individuals. Therefore, each organizer, owner, member, manager, officer and director should carefully consider retaining independent counsel to provide separate advice and representation.
As required by the rules of professional conduct, any retainer that you provide us will be deposited into the firm’s account with the Colorado Lawyer Trust Account Foundation (“COLTAF”), and COLTAF will receive any interest generated by the retainer. We may deduct fees, costs and expenses from the retainer as fees are earned or costs and expenses are incurred or we may hold the retainer as a deposit against future work. We will refund to you any balance of the retainer remaining after the representation has concluded.
All payments must be made by check, echeck credit card, our online billing system, or similar methods.
We cannot effectively represent you without your cooperation and assistance. You agree to cooperate fully with us and to provide promptly all information known or available that is relevant to our representation. You also agree to pay our statements for services and expenses. It is important that you retain all communications from and to us, including e-mails and attachments to e-mails.
WITHDRAWAL FROM REPRESENTATION
We may withdraw our representation either with your consent or for good cause. Good cause includes nonpayment of our fees and expenses, your failure to honor the terms of this engagement letter or to cooperate or follow our advice on a material matter, or any fact or circumstance would, in our view, render our continuing representation unlawful, unethical or ineffective.
Our policy is to scan and otherwise digitize all file materials, and to use and retain as little paper as possible. We therefore ask that if you, for some reason, require that paper files be kept that you notify us of that requirement at the outset (i.e., before you sign this Engagement Letter) so we may make proper arrangements. After our representation is over and all past due invoices have been paid in full, we will, upon request, provide you with a CD-ROM or other digital storage device that contains all of your information in digital form. Our own files, including lawyer work product (including e-mails) pertaining to your matters will be retained by the firm. Again, we keep no paper except (including trademark registration certificates) for documents that absolutely require paper originals (e.g., promissory notes) unless we have made other arrangements.
Drumm Law, LLC does not provide tax advice of any kind or nature whatsoever. If your specific legal issue involves tax advice, you must separately retain a tax attorney or certified public accountant regarding those matters.
Either of us may terminate the engagement at any time for any reason by written notice, subject on our part to applicable rules of professional conduct.
In order to avoid litigation in the event of any such dispute concerning any billings submitted by our firm, we mutually agree that any such dispute shall be submitted to mandatory binding arbitration. Such arbitration shall be conducted in Denver, Colorado pursuant to the Colorado Uniform Arbitration Act of 1975 and the Commercial Rules of the American Arbitration Association. The decision of the arbitrator(s) shall be final and binding on the parties. All disputes arising hereunder shall be governed by, construed and determined under the laws of the State of Colorado. Any unenforceable provision of this Agreement will be severed from this Agreement, and the remainder of this Agreement will be enforced to the fullest extent possible.
Some states require that a law firm disclose the existence of errors and omissions, and insurance coverage applicable to the services to be rendered. Drumm Law LLC hereby confirms the existence of such insurance coverage for the purposes of complying with such a requirement.
OTHER FEES AND EXPENSES
If our scope of representation includes litigated matters, you also will be responsible for payment of all costs of litigation, including, but not limited to, court filing fees, expert fees, court reporter expenses and fees, Lexis Nexis or Westlaw research service usage and access fees, print and copy expenses, and other expenses of litigation reasonable incurred and expended on your behalf. In any event, you agree that the firm will be permitted to incur up to $1,000.00 in expenses without your prior approval. You agree to pay the firm’s actual costs of collection, including reasonable attorney’s fees, costs, third-party collection agency fees, and interest, incurred by the firm for collecting any past due amounts.
TERMS AND CONDITIONS.
In the event of any conflict between these terms and conditions and the body of the engagement letter to which they are attached, the terms within the body of the engagement letter will control.
The undersigned individual, on behalf of the to-be-formed entity, requests Drumm Law, LLC to represent them in connection with the services described in this Engagement Letter. I have read the Engagement Letter and the Terms and Conditions and I agree to the terms and conditions of representation and the billing arrangements.
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Document Name: FDD Fransource International - To Be Formed Entity
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