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Legal Essentials for Coaching Businesses (with Alyce Zawacki)

Legal Essentials for Coaching Businesses (with Alyce Zawacki)

Learn about the legal essentials for coaching businesses in this presentation recording from the Great to Elite Online Summit for Coaching Businesses with Alyce Zawacki, founding attorney of the boutique law firm for creatives Alyce Zawacki Law.

The basics of trademarks for coaching businesses

Trademarks is an area where a lot of issues are happening right now. There has been a 200% increase in trademark applications at the USPTO trademark office in the past 18 months. It's taking them nine months to even look at applications at the moment. This gives you a little bit of insight into how seriously people are taking trademark registrations and how important it is to protect your branding.

When it comes to trademarks, people usually think of the standard trademarks that you may get on your brand name or logo. However, it's also important to think about trademarks from the perspective of your product needs. 

Even if you have a trademark on your brand name or logo, you may still want to think about having trademarks on your brand's slogans or products. If you don't have any trademarks on your brand name, logo design, or products, then it's crucial to start thinking about doing so and going through the trademark process. This is one of the areas where you really can't do it by yourself.

Ii is highly recommended to use an intellectual property attorney to help you get your trademark. It's a difficult and subjective process, and the requirements in your application are very particular. If you don't do it correctly, they will reject it.

A trademark is different from copyright. With a trademark, you're protecting your branding, while with copyright, you're protecting your creative materials. A business registration, such as an LLC, DBA, or corporation, does not mean that you have a trademark.

How to get started with trademarks as a coaching business

When it comes to trademarks, we are looking for strong trademarks that are not descriptive of your goods or services. Although descriptive marks are helpful when people are searching for a particular brand or product, they're usually not very protectable under trademark law. 

Therefore, look for marks that are creative, arbitrary marks like Apple, for example, before it was connected to computers and software, we just thought of the fruit. That is an example of an arbitrary mark where the name doesn't actually give you any indication of what the goods or services are. 

There are also fanciful marks, which are names that are completely made up, like Kodak, and suggestive marks that don't tell you what the goods or services are but allude to them, like Coppertone.

There are 45 different classes that you can register for trademark purposes. These classes are divided into goods and services, and part of the trademark process is figuring out which classes you should be registering in. 

With coaching services, we're typically looking at class 41 for educational and coaching services, class 16 for printed goods, and class 9 for downloadable goods, such as videos and courses.

When it comes to trademark conflicts, you should be looking for marks that are similar in sound and appearance that sell the same or similar goods or services. This is called the likelihood of confusion test. It's important to note that just because you spell something differently or add a term into your mark or join the words together, that generally is not going to be enough to make your mark distinguishable from a mark that is already registered with the USPTO.

Bullet points on how to get started with trademarks

Business formation for coaching businesses

Entity considerations

Many coaching businesses have already set up a formal business such as an LLC or corporation. Setting up that formal business entity will provide you with liability protection. This means that your personal assets will be protected from the business assets and vice versa. In the event that someone does sue the business, the hope is that your personal assets are protected in that lawsuit.

The other thing to consider with an LLC or corporation is whether you have the right tax selection. The great thing about an LLC is that it is a very flexible business entity, and you can elect S-Corp tax status. With S-Corp tax status, coaching businesses pay less self-employment taxes.

You also should definitely have insurance if you do not have it already. Although the LLC or corporation will protect you to some degree, you still want to have insurance to protect you in the event of a lawsuit.

Bullet points about entity considerations when creating a coaching business

The importance of written business agreements

Regardless of the entity that you choose or the entity that you are operating under, you should have a business agreement. These agreements have different names, like an operating agreement, a company agreement, or a partnership agreement. Even if you are not a C-Corp or incorporated, and even if you are a single-member LLC, you still should have a company agreement.

The reason being, if something happens to you as a single-member owner of that company, that company agreement will set forth a successor plan. In the event of death or mental incapacity, there's somebody that can come in and run the day-to-day operations of the company.

Alyce zawacki’s quote about the importance of a company agreement for coaching businesses

For example, here in Texas, if you do not have a written company agreement and for some reason somebody wants to leave the company, they can just sell their interest in the company to whoever they want. They may be forced to dissolve the company if they want to leave. It creates all these complications that could have really been avoided by just having a well-written business agreement and company agreement between all of the owners.

The other thing to keep in mind is to revisit this agreement, to have a look at it and just make sure that everything is as it should be. Get an attorney to review it. If you used a third-party service like and you got a company agreement through them, you definitely want to have a tailored company agreement drafted instead.

Bullet points about the importance of written business agreements for coaching businesses when creating the business

Copyrights for coaching businesses

The importance of registration

Copyright is automatic under the law. As soon as you fix a creative, original work in a tangible form, for example, as soon as you write it on paper or save it to a computer, you automatically get copyright protection.

However, here in the US, a few years ago, the court said that even though you have copyright protection, unless you have registration with the US Copyright Office, you actually can't sue anyone. So, at the moment, even though you may have copyright protection, you don't actually have anything that you can do with it.

That's why it's important to go ahead and register with the copyright office. The copyright office also provides access to statutory damages if you have a registration before an infringement occurs. That means that you don't have to prove that damages were done, the courts can just award an amount of damages, typically between $300 and $150,000, depending on what the infringement was and the facts of the matter.

In terms of what is copyrightable, creative works that are original are copyrightable. There is no protection for copyright purposes in titles, short phrases, facts, useful items or ideas..

Therefore, as a coaching business, if you have lesson plans, the processes written down in a document, or videos that you have created, you can copyright them. 

In terms of the copyright office process, it's relatively easy, and there are different applications that you can use depending on whether the work is published or unpublished.

For coaching businesses, you may want to copyright things like lesson plans, videos, courseworks, worksheets, or books that you've released. The processing time with the copyright office is about 1 to 10 months. You also need to upload copies of the work to the copyright office.

Bullet points about the importance of copyright for coaching businesses

Copyrighting courses

If your course is not delivered in one continuous presentation, you will need to submit separate applications for the course. With courses, it is recommended to work with an attorney because you’ll need somebody to assess which is going to be the best application to save you the most money. For example, a group of unpublished works is $85, and you can register up to 10, whereas a single work is $65 if it's published.

It is better to copyright your course before you launch it because you will need to separate out the literary work. So, separate out the lesson plans, the worksheets, copyright them in one group application, and then separate out the videos and copyright all of the videos in one separate application as well.

Bullet points about the importance of copyrighting courses for coaching businesses

Service agreements for coaching businesses

Why do coaching businesses need service agreements?

Service agreements are one of the most important things that you should be thinking about. A formal agreement is always best, and your coaching service agreement can be used for one-on-one coaching, group coaching, and mastermind services.

Contracts don't need to be full of legalese, but they do need to sufficiently cover your coaching business, especially from a liability perspective. And these are living, breathing documents that have to be amended as your business changes. 

If you have not reviewed your service agreement in a little while, get an attorney to get a review done. Laws change, and if you worked with an attorney, they have developed new practices that they're now implementing. Therefore, it is recommended to review your service agreements at least every two years.

Bullet points about what coaching businesses need in their service agreements

Coaching service agreement considerations

Looking at what should be included in your service agreement, you should be very specific about the services that you're providing. Scope creep is not good, especially if you're doing flat fees. If you don't have a clear scope of services, that can really cause issues in terms of determining when you charge them an extra fee or not. 

  • You should have some language about changes to services, stating that they can't decrease the service fees. Are you charging an hourly rate, a flat fee? Are there auto-renewals? Do you get upfront payments? Is it like a monthly subscription? All of those things need to be dealt with in the service agreement.
  • There's also confidentiality, privacy, and access to data concerns, especially if you are a business coach or a health coach, and you're having access to health information or private business information. Those really need to be addressed clearly. 
  • You also should have disclaimers if you are not a licensed professional in the area and make it clear that what you're recommending as part of your coaching services are recommendations only. 
  • Client commitment is also very important. Most coaching services are dependent on your client committing to the program, putting in the work, doing their homework, and listening to feedback. If they're not doing that, you should have some language that deals with termination and non-refundable fees.
  • Liability and indemnification need to be addressed, as well as ownership of your content publicity, permission, if you do want to  record parts of your services and use them for publicity purposes. 

And then of course, kill fees. If a client does want to terminate, how much do you charge for the kill fee? Do you refund anything that needs to be addressed very clearly?

Coaching service agreement considerations

Contractor & Employee agreements for coaching businesses

Contractor vs. Employee

It's very important to know and classify your workers correctly. It does depend on the relationship of the parties. The IRS typically focuses on the control of the process. If you are controlling the process, you're more likely to be an employee, versus just giving someone the work and letting them control the method and the process.

Other things, like exclusivity, determination of work hours, whether it's a specific task versus a long commitment, how that person is invoiced and taxed, benefits that are offered to them, and whether equipment, materials, and uniforms are provided, also need to be considered. 

If you are misclassifying people, there is the potential for you to get fined, be sued, and have to back pay. Therefore, you should work with an attorney in your state to ensure that you are classifying your workers correctly. Every state is different. For example, California is very strict on this and has new laws in place. Therefore, make sure that you are clear on the laws for your particular state.

The difference between contractors and employees

Agreement considerations

Things to think about in contractor and employee agreements include: 

  • Compensation, delivery of the work, whether they need to have any qualifications or licenses to do the work, their hours of work, and whether there are any benefits such as vacations, sick pay, and healthcare
  • Ownership of the work product that they create is also important; make sure that anything they do is owned by you. 
  • A non-disclosure agreement, non-solicitation, and non-compete are also important. Non-solicitation would prevent an employee or contractor from taking your clients or other employees/contractors and working with them behind your back, while non-compete can potentially stop them from operating a similar business in a similar area. These agreements have to be tailored very specifically, and non-competes are hard to enforce in many states. 
  • The use of employees or contractors' name, image, and likeness is another important issue if you are showing them on your website or using them in social media. 

Finally, termination is also an essential element to include in the agreement. You need to specify how a person can be terminated from your business.

Agreement considerations for coaching businesses when hiring employees or contractors

Other considerations

Some other considerations include employment issues, immigration issues, the Equal Opportunity Act, Equal Pay Act, and Affordable Care Act

And then, employer compliance training is necessary, especially in the areas of privacy. If you're dealing with any client data, make sure that you have a very clear privacy policy in place with your employees so that they know what they're doing. 

Online security, ADA, harassment, and other technical training may also be necessary.

In addition to having a contractor agreement and an employee agreement, having an employee handbook that covers more of your general policies, which can be changed at any time as you choose is also important. 

Also, make sure to think about state-specific wage, healthcare, overtime, and sick pay requirements. These vary from state to state, and then, tax implications need to be considered as well.

Other considerations for coaching businesses regarding contractors and employees

Privacy policies for coaching businesses

Privacy policies are mandatory for online coaching businesses. If you are collecting personal information, it is essential to have a privacy policy on your website. If you have any sort of newsletter sign-up, a contact form on your website, accept credit cards, have a blog that allows comments, or use cookies or Google Analytics, you are potentially collecting personal information from your users on your website.

Other privacy considerations include HIPAA and COPPA. COPPA deals with children accessing business websites aimed at children. The California Privacy Act, the GDPR (European Privacy Act), credit card processing, targeted advertising, all have their own laws.

Privacy policies need to be specifically tailored to your website. If you have purchased a privacy policy template, it's best to have that reviewed by an attorney. As your business grows, the risk of these issues increases. Therefore, having your policies reviewed and tailored is crucial.

Bullet points about why coaching businesses need privacy policies

Terms of use for coaching businesses

The terms of use aren't technically mandatory like the privacy policy is, but it's highly recommended. This is going to set forth your terms for using the online website or your online services.

Terms of use are highly recommended for any business that has any sort of e-commerce element, social engagement element, like a blog or a Facebook community, or if there's the ability for users to make public posts on the website or any website that requires a user to make an account as well.

Terms of use should be specifically tailored for your website. If you're working off a template that you may have purchased, it's time to get that looked at and reviewed to make sure that it is specific for how your business and how your online services are actually operating. 

In terms of what these address, look at how the services are used, how access is granted to users, your refund exchange and shipping policies, if you have physical products, IP ownership, social engagement rules, the ability to remove and delete accounts if you no longer want somebody using your services.

Also, it is important to have a technology error liability disclaimer that deals with things like maybe if your product isn't correctly described on the website, or if you have downtime on your website, or there's some sort of payment processing error that happens. 

Use a content disclaimer if you have people who are able to leave comments on your website or your online services, in terms of what they can and can't post. 

And then, affiliate link disclaimer. There's very specific affiliate link disclaimer language that needs to be displayed on your website and displayed in your terms of use if you're using affiliate links.

The importance of terms of use for coaching businesses

Key takeaways from this presentation

Protecting your coaching business is essential to its success and longevity. 

This includes understanding the different types of trademarks and seeking the help of an intellectual property attorney, setting up a formal business entity, and having well-written agreements and policies in place. 

For coaching businesses, copyright registration and proper worker classification are crucial, as well as having tailored service agreements and privacy policies. Regularly reviewing and updating these agreements and seeking the help of an attorney can ensure everything is in order and avoid potential legal and financial consequences. 

By taking these necessary steps, you can protect your business and provide clarity for your users and clients.

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