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There are many ways in which incubation programs can – and should – use written agreements in their interactions with clients. Putting things in writing both clarifies issues between incubators and client companies and allows for more effective enforcement down the road. Here are examples of the kinds of formal agreements and policies used by incubators and things to consider when writing them.

10 keys to incubation success

by Dinah Adkins

August 2002

When Adele Lyons became executive director of Gulf Coast Business Technology Center in Biloxi, Miss., in 1991, she encountered a client who owed back rent. Lyons tried to work out a payment plan to help the client stay current on his bills and make back payments to the incubator. She also tried to help the client in his efforts to develop and market his invention. But "when we asked questions and tried to work with him, he didn't want to share information," Lyons says, not even for proposals to market his product or obtain financing for his business. In addition, he wanted the incubator to pay for product testing, infomercials and other business expenses. She agreed to help him make contacts, but declined to pay his business costs.

The client then blamed the incubator for the failure of his business, Lyons says. He contacted members of the county's board of supervisors, which oversees the incubator, and local politicians. However, Lyons was able to refer the client, and subsequently supervisors and others who contacted her, to a lease clause that places ultimate responsibility for business success or failure firmly on the client. That clause, paired with documentation Lyons prudently maintained of her dealings with the client, defused the situation. In early 1992, Gulf Coast evicted the client for nonpayment of rent.

Lyons' experience is just one example of how incubation programs use written agreements in their interactions with clients. Anyone who has ever been burned on a verbal agreement likely can think of many more reasons. Participating parties can too easily interpret verbal pacts differently, and informal agreements can lead to inconsistencies in how an incubator treats individual clients. Additionally, without a written document to reference, it is difficult to convey the terms of an agreement to successors on either side of the table.

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Keywords: application -- client, client handbook, documents -- incubator, entrance policy, graduation policy, lease, legal issues, license agreement -- incubator, nondisclosure agreement, service agreement

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