By Natasa Cvijanovic
Tesla Payments
This article concludes my three-part series on contract negotiations. In the first article of this series, I discussed how to choose a good processor/ISO by understanding your portfolio and your merchants' needs. In the second article, I discussed Schedule A and contacted Jill Miller of Bodman PLC, an expert attorney in the industry, for her thoughts and feedback on Schedule A. She was incredibly kind and selfless, and I am grateful for her help.
I believe the information on this final article in the series is so valuable that an introduction or hook is unnecessary. Without further ado, here is Miller's list of top items every merchant level salesperson (MLS) should carefully review in their agent agreement.
Unerstand the agreement's performance obligations. Suppose you have successfully sold hundreds, if not thousands of merchant accounts and have accumulated a monthly residual income of several thousand dollars, only to discover that your residual income will be terminated if you stop selling for a certain period of time.
This is incredibly frustrating and not unheard of in our industry. "The only reasons for terminating residuals are proven fraud or if you have violated the non-solicitation clause," Miller advised. "If you have sub-agents or salespeople working for you, make sure the agreement includes the option to cure any wrongdoing on their part by terminating them.
"Over-disclose, over-disclose, over-disclose," Miller recommended.
"The last thing you want is your partner coming back to you 18 months later because they've made a mistake and overpaid your residuals" Miller warned. At this point you are likely to have disbursed the income further, especially if you have subagents or other salespeople whom you pay residual overrides to.
Non-solicitation is unquestionably a standard in any agreement, but you can negotiate the length of the non-solicitation term and, as Miller suggested, make sure it is not overly restrictive. Assume you have an agreement with ABC ISO of XYZ processor. In addition to being unable to move your accounts from ABC, ensure that your non-solicitation clause does not prevent you from writing any of ABC's merchants, including those not in your portfolio.
Aside from the obvious restriction of not being able to write business for any other company, "exclusivity could potentially violate the status of independent contractor," Miller said.
Regarding rights to sell, these basic options should be included: the right of first bid instead of the right of first refusal, and the provision that if the MLS and the processor cannot agree on a price, the MLS should be able to sell to a third party.
Residual survivability determines how your residuals will be distributed in the event of your death. An MLS's right to residual payments should be transferable to their heirs and paid regardless of whether his or her family continues to write merchant accounts. This is true for MLS who write merchant accounts as sole proprietors or individuals, while those who write business as an LLC or Inc. are already set up to ensure that their residual income continues to be paid to their LLC or other legally formed entity.
Miller noted that when it comes time to execute the agreement, you should do so as a legally formed entity that is a party to the agreement rather than as an individual to protect yourself from potential liability that you may be exposed to as an individual. Also, make certain that your heirs can assume your membership or shareholder status within the entity.
Because contracts reveal so much about the people and companies with whom you're doing business or considering doing business, I always like to do a first-pass review of any and all contracts I enter into. However, I am aware of my limitations and would not sign anything unless it had been reviewed by a reputable industry attorney.
If you want to make a career in this industry, you must protect your most valuable asset, which is your residuals. If the agreement is one-sided or includes a number of clauses designed to deny your residuals, this is a red flag. When you find a potential partner with whom you are comfortable, having your agreement reviewed by an attorney in our industry is not only a good idea but a necessity. This is a serious matter that should not be taken lightly.
Previously, I emphasized the importance of achieving a balance between ideal and practical contract terms. Make certain that your attorney negotiates terms that are fair and acceptable to all parties. 
Natasa Cvijanovic, co-founder and CEO of Tesla Payments, has a proven track record within the payment industry of cultivating successful relationships with ISOs, MLSs and strategic partners. In developing national sales channels, she provides training and coaching to sales partners to enable them to become better business partners and advocates for their merchants, and to assist them in building portfolios producing steady residual streams. She is also dedicated to consistently delivering high levels of professionalism, integrity, dependability and trustworthiness. Contact her at natasa@teslapayments.com.
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