How a contract lawyer spotted a scammer (before it cost a client everything)
There’s a particular tone clients use when they say, “I’ve got a contract for you to look over. It’s a really big deal for me…”
Equal parts excitement and “I hope this isn’t a problem.”
That was exactly the vibe when a client came to me recently. She’d been approached about franchising her business. In her words, a dream come true. And then she handed me the contract.
First rule: tell me the deal
Before I even open a contract, I always ask the client to explain the deal to me. This is because I’m trying to spot any gaps between:
- what you think you’re getting, and
- what the contract actually says you’re getting
That gap is where problems live.
Contracts are actually a communication piece, they are meant to make sure everyone is singing from the same hymn sheet.
The pitch
The pitch had sounded polished. The “coach”:
- had a strong background in business coaching
- had built her own successful franchise
- had helped 40 other businesses franchise their systems
And the offer?
She would:
- help structure the franchise model
- find franchisees
- guide the rollout
However, the contract told a completely different story
By now, as business lawyers we’re fairly used to AI contracts and having to fix inappropriate clauses or the wrong template being used. But in this case, it didn’t just feel a little bit off, it was completely upside down.
Instead of a franchising or agency-style agreement, it was drafted like a services agreement…with the roles reversed.
The contract specified that my client was the service provider with all of the responsibility. My client was delivering all the IP, systems and contacts.
The “coach” had no obligations to deliver anything. There were no performance requirements, no clear outcomes, no timeframes, no accountability.
But the payment terms? Very clear. My client was required to pay in stages, upfront and ongoing, regardless of whether anything was ever actually delivered. In fact I still don’t know what was meant to be delivered.
That’s not a franchising deal. That’s a donation to the “coach’s” holiday fund with a side of admin.
When the contract doesn’t match the deal
At this point, the issue wasn’t just “this is a bad contract.” It was: this doesn’t match the story at all. And when that happens, you don’t get into the detail of the wording, you zoom out and start asking bigger questions.
So I did a bit of digging.
What I found was two websites for what appeared to be the same agency. One looked legitimate. The other… Same branding. Same testimonials. Same content. But not quite right.
A WHOIS search for each domain and a check against the ABN on the Australian Business Register made it pretty clear which one was real and which one wasn’t.
Delivering tough news, gently
I went back to my client and gently asked “are you sure that this has come from that agency? What due diligence have you done?” She was confident it had. So instead of going straight to my suspicion that this was a scam, I suggested we ask for a different contract and said, this one doesn’t line up. Maybe there’s been a mix-up.
But I can confidently tell you, someone who has successfully franchised 40 businesses does not send out a totally backwards, legally flimsy contract. My heckles were well and truly on alert.
And then it unravelled
What followed was a bit of back-and-forth between my client and the “coach”. Questions got asked. Details weren’t clarified. And eventually, the whole thing fell apart. The contract issued by the “coach” had given her away. She was a fraud.
The real takeaway (it’s not just “read your contracts”)
Yes, contracts matter. Obviously. But this wasn’t just about spotting a few one sided clauses. It was spotting a disconnect between reality and what the contract was portraying.
Your contracts say a lot about you. In fact, they are a key part of your branding strategy and each organisation has its own values reflected into how it contracts.
A bad contract can unravel a deal and break trust before you can say “contributory liability.”
Contact Sarah Gee, Bendigo business lawyer next time your contracts need a second look, via phone, email or book in directly online.
