YOUTUBE VIDEO: UAV FLIGHT CONTRACT SERVICE AGREEMENT FOR DRONE PILOTS AND THEIR CLIENTS
with Alan Perlman of UAV Coach and Drone Pilot Ground School & Enrico Schaefer, Esq. of Traverse Legal, PLC and the DroneLaw.Pro team
Alan: Hey everybody, this is Alan at UAV Coach and Drone Pilot School and I am very excited today to be talking with Enrico Schafer over at Drone Law Pro. I have been working with Enrico for over a year now on a variety of projects but his firm, I’m going to let him tell you more about it in a second, his firm specializes in commercial technologies and is one of the premier resources in the legal perspective as far as the drone industry goes. I have been relying on him for a lot of information for us and our students within the last year. The reason I am recording this video is that Enrico has just come out, his company has just come out with a new sUAS Service Agreement and I want to talk about that product and how it might be a good fit for you, if you are in the process of growing your own aerial service business like I know a lot of our students are. Enrico, how are you? Am I coming through okay?
Enrico: Your great Alan. You look good.
Alan: Awesome. So, tell us a little bit about Drone Law Pro and then, tell me a little bit about how Paris was. You just got back from an amazing set of travels for a couple of weeks and I want to hear about the show you went to and any cool products you may have seen.
Enrico: Sure, great. Drone Law Pro or Dronelaw.pro, we are a law firm called Traverse Legal, PLC, and we have been doing emerging technology law representations since 1992 when the new and emerging technology was something called internet. Right? So, we have been in drone space since 2012. We help companies launch their drone businesses, contracts, intellectual properties issues, compliance with Part 107, these types of things. But, we know many of these companies are just startups, so we have created these PDF documents that you can buy, typically for $350 dollars each, you get a PDF, you get training videos from me, as the attorney, telling you how or why to use the contract, what the legal concepts are you need to understand for your drone business in order to protect yourself and your customers. So, one of those items is this sUAS Service Agreement, which is really a drone customer contract. That is what we are going to talk about today. We just released version 2.0 which is a really exciting piece of technology which is PDF based technology that lets you get a great format in, custom branded, customer contract for you. And, it has been really well received since version 1.0. This is going to be even better for folks because it really adds to the level of professionalism.
Just got back from Paris, the largest air show in the world, four hundred thousand people. I went with nine other Michigan companies to promote Drone Law Pro and the other UAV services we offer as well as part of the Michigan contingent to bring companies to Michigan to do business with companies like ours. It was amazing. You had everything from Airbus to the military jets. Hundreds of vendors from every country in vendors spaces that we just massive. You had a lot of large aviation companies but you also had a lot of UAV vendors there who were looking to promote their new platforms, their new software, their new services, a lot of people in the tech space of UAV were there, they had developed new technology. It was really cool.
Alan: I can’t imagine. I think about InterDrone which is a conference you and I have been going to the last few years in Las Vegas. The largest shows in the US are a few thousand people, depending on what aspect of the market you are in, you are talking about four hundred thousand people…
Alan: So that must have been amazing?
Enrico: It was. So, you can imagine it was a little exponential in the sense there was military and big time commercial vendors there as well. That is always exciting to see. To see drones with forty feet wing spans that do really niche things so that was really cool. It’s aviation, so at the end of the day we as a community need to remember that we are part of an aviation community and so to go to a big aviation conference like this and be so well received as a UAV specific vendor was really exciting. And, we were one of the darlings of the conference, because there were probably fifty-sixty UAV related companies there but there was only one drone attorney at the entire conference, and it was me. So, that was pretty special and it made it easy for people to connect to me and find me.
Alan: That’s great. So, let’s take advantage of the fact we have a drone attorney on this video. We have a lot of students Part 107 test prep program, they get certified, I don’t want to diminish the amount of studying and preparation that is required, however, it is just a multiple-choice test. Right? So, it is relatively straight forward to get that remote pilot certificate. I think that where a lot of our students are challenged is figuring out what to do next. There is legal stuff, there is business stuff, marketing and sales, there is a lot of different areas where we are finding a lot of great questions and discussions from our students after they get certified.
Last time you and I chatted, we recorded a call very like this and we talked about a lot of the legal considerations of getting into the drone industry. What it means to actually comply with the regulations, in the field, day to day. We talked about business entity formation, trademarks, some great stuff. I don’t want to cover all that again, I will make sure we link to that video in the notes of this one so that people can access that as well. To kind of frame this SUAS Service Agreement, this contract you put together, let’s talk about that contract. Right?
I’m a drone pilot, I’m flying that Phantom Four, Aspire One, I’ve got a few real estate brokers that I am interested in doing some property marketing with. We can start there and maybe talk about some other services as well. We are at the point of the conversation where they are sold. They want to know how much it cost? They want to know how long it’s going to take? They want to know, what are they going to get? Maybe they have even asked for a contract? I know a lot of time in these discussions a contract might not necessarily come up, it’s not like hey show me a contract and we will get things started. More like where do we go from here, I am interested, let me know where we go next. I am relying on you as the professional, a lot of people fall short here. Kind of walk me through how I should be thinking about this. I’ve got a few brokers that are interested, what are my next steps to think about what I should be doing with these guys.
Enrico: Right, so the first thing you need to think about Alan, you need to present as a professional drone service provider. It’s perhaps the most important advantage you can have if you achieve the goal of really coming across as a professional. The reason why that is important is because your competition is a lot of fly by night people, a lot of folks may have just bought a drone, willing to come in on the cheap. What’s to stop that real estate agent from collecting from the guy next door who has got a drone. And the answer is the market barrier of professionalism. And, you need to educate customers, it is very important they only deal with drone service providers that are true professionals, that strictly comply with the rules and will protect the customer of any problems that might incur as a result of the flight. The way you do that is with a customer contract. A customer contract, you can certainly take some money and turn over the videos and digital files, but that is not professional. That is not the way that business is typically done and it doesn’t present you in the right way or create a market barrier. If you have a contract that is specific to drone services and that contract is designed, as ours is, to make the customer feel safe, when the customer signs that contract they have their expectations set. They know exactly what they are going to get. They know exactly when they are going to get it. They can see the cost in writing, there is no surprises. They can see the compliance and understand what it is that they are paying for. Then when the fly-by-night person comes to your customer and says they will do it for less, and the customer says, “okay, what does your contract look like?” and the answer is I don’t have one, that is great. That is a market barrier because they have already seen the contract, they see how protected they are in your contract, and that the other person isn’t going to protect them. They will see that as a red flag. We always tell our drone clients that you always have to protect the customers on the market barriers. That doesn’t mean beating them up on how risky it is. That means educating them on the right way and the wrong way. So that when the wrong way walks through the door the customer has zero interest in signing up for that program.
Alan: That’s a great introduction and one of my take always is that the contract, obviously there are legal implications in having a contract and that protection like your mentioned, but it’s being used as a marketing and sales vehicle. Right? Demonstrates professionalism, your laying all your cards out on the tale, and if I am a broker, construction site manager or real estate broker, and I’m talking with a number of drone pilots I am going to go with the guy or the gal who has a contract. I know they are the real deal, I know they have insurance and I know that they are following regulations like local regulations. That is interesting that not a lot of people think of contacts as a marketing tool but that is essentially what is happening here, you are facilitating the sales process and you are being consultative. This is not a transactional sale, we are not selling widgets we are not selling photos, not videos, not data, we are selling an experience. Not a lot of people understand what it actually means to bring a drone pilot on site, to create a safe scene, to have the drone pilot take all that data and back it up and render it over the course of a couple of weeks. A lot of people don’t know what they don’t know and I think a contract is a good way to kind of tell them that story.
Enrico: It really is Alan. The kind of point is everyone is new to this. Even the people who are very successful drone service providers. It is not like a lot of customers are beating down there door yet. A lot of it is going out and making customers understand what you can offer and getting them signed up. Right? So, the educational aspect with the customer really is the best market barrier. What you are doing is your essentially selling yourself but you are also leaving them with all of these red flags and if the next person that comes through the door and all these red flags get triggered you now have the market advantage. Obviously, there are legal protections in the contract for you. There is a whole licensing section, which you and I have talked about before, you are not just selling services of driving to the site and operating the drone, but, you are also licensing copyright. Copyright is a drone operators best friend. There is no better law in the whole world than copyright law if you are the copyright owner and so you are going to license your works, the photos and videos and data to the customer. You can give them a little slice of those rights, you can give them a lot of those rights, you can upsell, you can down sell, but you don’t sell photos, videos and data. There is no such thing. You license it or you assign it, and this contract has a whole licensing section where you are going to tell the customer what licensing rights they get of the photos, videos and data. That is really important, because if they go beyond the license you can go back and collect more money from them. You can give them the license for the photos and videos to use for the purposes of the MLS listing and then they are using the photos and videos on their own website to market their own services, they need a license in addition to that, and strict liability they have to pay you for that. So, whether or not you pursue that your choice but you now have that option. If some third party uses it without permission, you know have this base of contracts that are in place and show this person does not have permission to show your work. Establishing your licensing model is critical for every drone service provider. You have to understand drone copyright license if you want to be in this business. It would be like a neurosurgeon who doesn’t understand how to use a knife. You have to understand copyright in this business, it’s your best friend.
Alan: What I like about this as well is, I didn’t go to business school, but I remember reading some sort of strategy that you don’t want to necessarily offer a flat fee as the only option, pay me a thousand bucks and that is it. You want to present maybe a low option, a medium option and a high option to sort of showcase what you can do and to leave the door open a little bit for discussion. And, people are sensitive to price in different ways. They might want to purchase that full license, they might want to own the right to that one single beautiful video that you created, that photo you took, and they want to own it for the test of time that they are a broker, that they are in that one neighborhood over and over again. Maybe they just want to pay that one time for that nice overview neighborhood shot, but if they are struggling to make overhead that month and don’t have that much money, and they want the cheapest option, they want that version of the license that is fine too. You are catering those personalities with one contract and one conversation.
Enrico: Yeah you want to be able to upsell and down sell, that is all built in to the contracts that you want to take a look at. That marketing and sale is part of what is built into the system that we developed and it is critical. Let’s say you are trying to land that first gig, you can show them that contract with the limited license, to just use those photos and videos for a specific purpose and then when you get in to close you can say, “you know on this deal I’m going to give you full exclusive rights globally to use the photos and videos for any purpose that you want on this deal and I am going to give you that for free. Now you are able to market for free so, oh great I’m getting these rights for free and I am not having to pay for them so it creates tremendous sales flexibility.
Alan: I love it. And trust, and all that. Do you have the contract open on your computer? So, we can kind of run through? You mentioned there is some red flags that you might able to present, so, you want to leave that conversation open to show that you are professional and the other person they might be talking to might not necessarily be professional so can we run through what some of those big-ticket items are and what a contract should look like?
Enrico: Sure, let’s take a look at that. I’m going to go ahead and share my screen right now with you Alan. You will see the contract that we have developed. You should be able to see my screen right now.
Alan: I’m not seeing it yet.
Enrico: Hold on, I’ve got to hit start.
Alan: Okay I see data input page.
Enrico: Yeah. So, this is the general SUAS Service Agreement data input page. So, unlike any other PDF you have seen, this is a very special type PDF. What it allows you to do is to input the information into this data fields, the day, the week, the month, the year. Are you going to want to show your logo on the contact? You probably are. You have that option here. You are going to put your full company name, abbreviation, customer, etc. and then you are going to identify what services are you going to provide for the customer. One of the things I mentioned earlier is you are going to want to show the customer all the things you are doing beyond driving, flying and giving them that SD card. Right? Or dropping them some files in a large format drop box. You’re going to secure all permissions and authorizations for the flight. If you check that box, it’s going to end up in that contract. Are you going to be compliant with FAA regulations? I hope you are, you check that box. Only the boxes you check will end up in your final contract version. So, you know, we have designed this more and more to show them all the things you can do. There are all of these other boxes where you can put any special terms you want to and they are all going to appear in this final, fully formatted, branded version of a PDF which you can send. You can see things like hourly rate, day rate. What kind of rate system are you going to have? So, you can have a full day rate or a half day rate. What the rate approach? There are instructions built into the contact. Are you going to provide an estimate? All of these things will be incorporated into a contract and only if you check the boxes.
What are the deliverables? How much video, how many photographs, you can put that in these particular boxes. What are the service dates? What are the payment terms? What type of insurance do you have? You want to educate your clients? This is one of the red flags. You have got insurance, perhaps one of your competitors do not. What jurisdiction law do you want to govern this? Certainly, wherever the drone service company is located is going to be where you want to provide that. And then of course you have got all kinds of license type, exclusive license, non-exclusive license, the copyright system that we were talking about, where you care going to tell the customer what rights do they get. Is it going to be nonexclusive? If it is non-exclusive you can license those photographs and videos to other people. Perhaps other people who are not competitors to that customer. That is going to lower the cost to the customer and allow you to retain value so that if they are only going to pay half of what you are used to getting, you can design within this contract a product a copyright product that can meet that budget and allow you to retain some rights. You can identify the scope and purpose of the copyright. If the copyright can only be used for the purpose of an MLS listing, during the term of the listing agreement, you can put that term in here. It shows you how to do all of this, right? So, once you get that data input page all figured out, you’re going to go to a button, by the way you can add all the additional terms to the contract as you want here, and then you are going to say, “prep for the customer”. When you hit that button, it is going to spit out the final custom service agreement based on only the selections you made, that is fully formatted, no spacing or line issues, and you can see here that you have a beautiful contract that is private labeled to your company that presents you as a professional drone service provider. If I get a contract like this, I feel very confident that I know what you are doing, and that is the key to all the documents that we offer. It really helps you create these little market barriers that you are professional and the fly-by-nights are not.
Alan: And, speaking of feeling comfortable in what you are doing, when you were going through those items, frankly, I saw a lot of legalize language that maybe I didn’t understand. I also heard you mention training videos. Correct me if I am wrong, but I heard you guys sell this template, this process, with extra training videos that teach you how to actually use it with potential clients. Is that right?
Enrico: Yes, with all of our, what we call “Ops in a Box”, comes with fifteen essential contracts you need to succeed with everything from contractor flight group agreements, so the people going out to do the flight with you, be that independent contractors, they are assigning all the rights to you, things like operations manuals, copyright assignment forms if you want to do assignments, those are the documents in this package. But, this sUAS Service Agreement is also a standalone product, and the key here is, with all of these documents, you not only need the document you need to understand the document from the legal point of view. So, what is copyright licensing? How do you want to handle whether it is an hourly rate, half day rate? What is the best approach for a drone pilot to put one of these contracts from a legal point of view or marketing point of view because you are selling, because of this contract? And, those videos we created, because they are password protected, you can access those videos as part of this $350.00 purchase, this sUAS Service Agreement, is going to walk you through what I think is an hour worth of videos, all the legal aspects of this contract so you understand it. Why is that important? It is the foundation of your business. If you don’t understand the legal foundation of your business you are not going to get the most ROI out of your activities. So, we are helping you understand the legal principals you need to help you succeed
Alan: That’s great. You said it is $350.00, that is a one-time payment. The reason I am saying that and confirming that is because most law firms that I have dealt with in the past will charge hourly, right? For emails? Phone calls? For forms like this, but you guys have packaged it, you have productized it into a one-time payment. Somebody gets training, they get this template to use over and over again as they grow their business. And, of course, if other things come up I am sure they can reach out to you with questions. Can you talk a little bit about what some of those other forms and services you have been offering folks entering into the commercial industry look like? Because, I know this is only one aspect of what you guys do. Can you give people kind of growing their business a teaser of things that might come up or other things they talk about? What kind of services do you provide.
Enrico: Sure. So, the service agreement, the customer contract is by far the most popular document, we also offer a Part 107 Operations Manual. Same thing, $350.00, you get the training videos, you get the operations manual as a PDF and you can fill it out and create a custom PDF for your business. Contract agreements for your flight crew, if they are not employees then they are independent contractors and you need a contract with them that establishes their independent contractor status and as importantly make sure they are not going to steal your customers, that the copyright if they happen to be flying the drone or they may be operating the camera they may be the copyright owner and you need to get those copyrights assigned to you in order to license them to your customer. Otherwise, that contractor could come back and cause all kinds of chaos to you in the future. Big items, LLC set up, so again $350.00 plus state filing fee depending on what state you are in we can get your single member LLC set up so that you are protected against personal liability.
Alan: Just real quick, I set up my LLC back in 2010 by myself and if I could go back and do it over again I happily would have paid $350.00 to have someone do it for me the right way. Long story short, I made a mistake in my paperwork, I was dealing with the IRS three years later, it was not very fun. We live and we learn, so I am telling you if you are getting your business started and need to set up an LLC to protect yourself…we won’t get into kind of business entity formation structure and logic here, correct me if I am wrong, but a lot of people getting into this industry want to set up a basic, maybe single member LLC or if you have a partner a multi-party LLC, it’s easy to get started. It is great you guys do all of that paperwork, I guess I wasn’t really aware of that.
Enrico: Yeah, we pretty much handle everything from start up on through. Our goal is to help you grow and to give you as many cost effective options. I mean we represent some of the biggest companies in the world, helping them to design their sUAS internally to provide services to customers, huge construction companies, infrastructure companies, they have very complex issues. We do that part. But this space, the drone space is going to live and die on these startups that are going to be the innovators in this space. They are going to be the ones on the field developing the business model, developing the industry standards, so our goal today is to get you up and running, as cost effectively and professionally as possible. And then you know what, a year later if you are a successful business, likely you are going to come back to us for trademark registration, complex contact drafting and many types of other matters.
Alan: Like I have done over the last year with you guys.
Enrico: Like you have done, and many others. We love this part of the market development because it is a lot of startup companies and we see what works and we see what doesn’t. The number one differentiator between the companies that are succeeding and failing is perseverance. You are going to hit barriers. Those who quit when they hit the barrier come and go. Those who get over the next hurdle, and the next hurdle, and the next hurdle, they are looking at blank space. I have a client, Alan, who didn’t even do anything in drones till August 28. Decided to take the test August 29th, and I am very confident he is running more drone operations per day than any other drone operator across the country. He has got exclusive license agreements with technology providers, drone light shows, and he is just killing it. He is doing a huge job, 150 drones on an agriculture location, that was less than a year ago. And what is the difference with him, perseverance. He doesn’t quit and he doesn’t stop and he had no aviation experience prior to jumping in on this space.
Alan: Uh-huh (affirmative), I have so many conversations with our students about marketing opportunity. How big is the opportunity? How much money can I make? What can I do and how hard do I want it? What is your passion and your drive? Where is your perseverance? And I think the people who have the opportunity to leverage technology with a form like this is one small example. You know setting up a website that will work for you. Setting up an inboard marketing structure where people can easily find you and contact you and you are doing ten times that the average person who sets up just a basic brochure website with a video and contact form like so many that I see. I need to be careful, I can go down some rabbit hole regarding marketing and sales. I think it’s the 80/20 rule, right? We’ve got forty thousand-ish certified pilots in the US right now. You know, are eighty percent of these people going to be offering drone services three or four years from now?
Alan: Probably not. Do you want to be in that 80 percent or do you want to be in that twenty percent? I think you have to put one foot in front of the other. I love the word perseverance, I think it is a terrific way to describe what it takes to sort of plant your roots and to build a long term sustainable company in this industry.
Enrico: Very much so. You know, we are all in the boat together as particular types of service providers. Rising tide lifts all boats. And I tell you, if you are doing it right as a drone service provider, you are hoping others out there are doing it right, once the customers, once the market understands what the right way is, they will be a lot less inclined to go fly-by-night. They will be the ones saying, “where is the contact…what are my license rights?” If this market is going to succeed it is because we go beyond Part 107 and we all help create industry standards that are beyond Part 107, that make it a professional business. If we are not a professional business, then anyone can do it as long as they bought a drone. And, there will be market chaos, pricing will drive right down to the bottom, and we all have a responsibility to reflect that professionalism and enforce it with our customers.
Alan: I wholeheartedly agree. I think that is a great place to wrap up. Where can people find more information about you Enrico? And I’ll say, I am going to link to this sUAS Service Agreement to the website in the show notes here but where can people find more information about you and what you guys do?
Enrico: So dronelaw.pro is our website, it is www.dronelaw.pro not .com but .pro is a good place to start and obviously do your research, we always say. An attorney relationship is not a marriage but it is in that same type flavor, you want to work with attorneys you are comfortable with, trust, that are there to help you and aren’t going to bill you every time you pick up the phone to call them. Right? We have a lot of clients that really love us but if for some reason a client does not feel like it is a great match, we encourage them to keep shopping around because we want to have relationships drone pilots and drone service companies. That is what we are looking for, long term, rising tide lifts all boats. The big players three years from now are coming out of your courses, they are coming out of my start up packages. They are going to be the industry leaders in the future
Alan: Amen. I love it. Thank you so much.
Enrico: Thanks Alan. Have a great day.
Alan: You too.