Should You Use an Employment or FAST Agreement?

Standardized Legal Documents Should You Use an Employment or FAST Agreement?

When To Use a FAST Agreement

The preparation of contracts does not have to be nerve-wracking any longer. With DoNotPay’s guidance, you will get lots of valuable tips about different legal documents and agreements. While this article provides information on a FAST agreement, you can browse through our website to find the specifics of other types of documentation necessary for your business operations. 

What Is a FAST Agreement? 

A FAST agreement was first created by the Founder Institute to help startups:

  • Establish advisory boards
  • Engage with advisors and mentors

The FAST part in the name of this agreement stands for Founder Advisor Standard Template. 

Entrepreneurs and advisors use this agreement to:

  1. Establish their working relationships
  2. Trade support and expert advice for a certain amount of equity—under a FAST agreement, an advisor commonly receives the company’s shares in the future for the services he or she offers  

An advisor who signs a FAST agreement is not an employee of the company but acts as an independent consultant.

Hire Advisors, Consultants, or Mentors

To understand the difference between advisors, consults, and mentors, you can take a look at the following table:

AdvisorsConsultants Mentors
  • Consult one-on-one with founders and executives 
  • Sign FAST and other agreements with companies to define their roles and obligations
  • Get equity—and not cash—compensation
While consultants have a similar role as advisors, they are:

  1. Commonly hired to conduct one or a few specific projects and activities
  2. Paid in cash

  • Do not get paid
  • Act in an informal capacity

Why Use a FAST Agreement

While a lot of entrepreneurs may have great business ideas and solid plans, they:

  • Need guidance on different aspects and operations
  • Cannot provide cash compensation for the necessary expert advice 

In this case, entrepreneurs can introduce advisors by offering them a share in their company’s equity:

  1. As the company grows
  2. Based on the advisors’ performance   

To engage an expert to take on an advisory role in your business, you should use a FAST agreement. However, you should offer this person an employment agreement if he or she will 

  • Provide essential input to your operations 
  • Perform an executive function—if this individual is appointed as a director, you can also use a director’s service contract

A Guide to Engaging an Advisor

The following table outlines common steps you—as an entrepreneur—should take to engage advisors:

Step To TakeTips
Do researchYou should try to identify several suitable advisors who can contribute to your business’s success and growth. For this purpose, you can use:

  • Your personal network
  • Business networks, e.g., LinkedIn or Crunchbase
Get in touch with an advisorTo contact the advisors you find interesting, you can use the contact details you find on their:

  • Company’s website
  • Business network profiles
  • Personal website, if they have one
Organize a meetingYou should arrange a meeting to discuss potential cooperation
Make a requestIf you believe the advisor can contribute to your business operations and projects, you can suggest testing out your working relationship
Present an opportunityYou should present a more formal business offer to the advisor if the previous testing stage is successful 
Create a FAST agreementIf advisors agree to your offer, you should prepare and send them a FAST agreement

FAST Agreement Key Parts

A FAST agreement should include some of the following:

  1. Services—this section needs to outline what you expect to receive from the advisor, i.e., to provide expert assistance and advice to your company
  2. Compensation—type and amount of shares that the advisor will receive together with:
    • Vesting schedule
    • The mechanism under which the advisor will receive these shares
  3. Expenses—an advisor is entitled to reimbursement of any work-related expenses, e.g., travel costs incurred when performing the agreed tasks
  4. Terms and termination—this part of the agreement needs to specify how long the defined terms will continue (usually until one contractual party terminates the contract)
  5. Independent contractor—the agreement needs to specify the advisor’s relationship with the organization, i.e., that he or she is not an employee 
  6. Non-disclosure—this part is related to the use, definition, and disclosure of confidential information
  7. No rights guaranteed—you should specify that an advisor does not get rights under the company’s intellectual property, copyright, patents, and confidential information 
  8. Assignment of intellectual property—this section further explains that an advisor must assign all rights and interest to any new concepts or inventions he or she has created for the company under the contract

The agreement ends with the:

  • Effective date
  • Governing law
  • Names, addresses, and signatures of both parties

How To Create a FAST Agreement

You can hire a lawyer to create this or any other contract for you. If you would like to save some funds, you could also access the Financial Institute’s FAST agreement template and modify it to meet your specific needs.  

How To Prepare Legal Documents

As you must have certain legal documents and contracts to run your business successfully and secure your projects, you can use:

  • Legal assistance—you should be prepared to pay a hefty sum for the services a lawyer will provide
  • Online templates—make sure you do thorough research and comparison before you choose the one you will use as a basis for your company’s formal documents
  • DoNotPay’s Standardized Legal Documents product to get help with the preparation of numerous documents and agreements

DoNotPay Can Save Your Documentation Preparation Day

When you would like to save your time, money, and energy, you can turn to DoNotPay to help you deal with various administrative aspects of life. 

One of our helpful and practical tools is Standardized Legal Documents, and it can help you prepare the following documents:

What do you need to do to receive an agreement tailored to your special requirements? and take the following steps:

  1. Choose our Standardized Legal Documents feature
  2. Enter the name of the document you would like us to help you with
  3. Answer a few simple questions our chatbot will ask you

Once you receive a document that can secure your upcoming projects and working relationships, you can use our app to:

  1. E-sign the document
  2. Get it notarized online 24 hours, seven days a week using the Notarize Any Document feature
  3. Fax the document securely via our Online Fax product

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