Dear Dakota | How to Ensure Interior Design Clients Buy Furnishings Through You: Leveraging Your Interior Design Contract

DEAR DAKOTASYSTEMS & OPSCLIENT EXPERIENCE

Jun 14

How to Ensure Interior Design Clients Buy Furnishings Through You: Leveraging Your Interior Design Contract

Dear Dakota,
We charge a flat fee for Phase I and Phase II of our interior design services, and don't charge a service fee for the purchasing phase. Our flat fee pricing is contingent upon the client agreeing to purchase furniture through our vendors. We offer this arrangement to secure the entire project and ensure that clients buy all the required items from us.
Recently, we encountered a new challenge with a client. Although she loves the design and we are within budget, she expressed intentions to sell the custom home and not purchase furnishings at all.
It’s been two months since we presented the design, and she hasn't signed the contract yet. I've contacted her multiple times, but she has only responded regarding ongoing contract work, not the furniture purchase.
In my current contract, I have a provision that allows me to charge the client a fee of a specific % if the client removes items from the scope that were originally presented with a cost and within budget. I'm curious to know if your contract includes anything similar or if it has provisions to make it ironclad in such cases.
While this particular project is already underway, I'm concerned about handling similar situations in the future. Do you have any advice?

First, yes, our Full Service Scope and Service Agreement includes provisions to protect designers from clients who don’t purchase through them.

This designer indicated “it’s been two months since we presented the design, and she hasn’t signed the contract yet.” Our scope and service agreement stipulates a very different process than this, where both the design service and purchasing are covered in one contract.

Before we dive in, please note: I am not an attorney and this is not legal advice. Always confirm with a licensed attorney in your state before implementing any contractual changes.

So, how to prevent this from happening in the future?

Make sure your full service interior design contract has terms to protect you from clients NOT purchasing the design.
Make sure your full service interior design contract specifies that your construction administration phase is billed hourly and is for project management services which may include communication, site visits, meetings, etc. Let them know that product management is included when they purchase furnishings through you after they have approved the design.
DO NOT separate out the purchasing contract/agreement and provide that at time of presentation, especially if service fees are contingent on purchasing. NOPE, never. NO WAY!
If you are not providing your purchasing terms up front — as part of the initial contract/service agreement, how could you possibly enforce or require that the client buy furnishings through you?
To me, THIS seems like a HUGE issue.
If you have two contracts (the first for design services and the second for purchasing) how can you include contractual obligations as they relate to purchasing in the first contract, if you have not yet provided purchasing terms (which would be in your second contract) or obtained a signed contract?
You are putting the cart before the horse.
There should be one contract at the onset of the project that outlines both the design phases AND the purchasing terms.
SO: if you require clients to purchase furnishings from you in order to secure a certain design fee, your service agreement and purchasing agreement should become ONE and the same. (Our full service interior design contract is structured like this).

Let me put this into a different scenario for you. Let’s say I hire a chef to prepare a meal planning menu for me. There is also an option for the chef to grocery shop, come to my home, prepare the meals, and stock my fridge with ready to eat meals. Amazing.

My contract with the chef is specific to their meal planning services. I will pay them $1000 to create a 30 day meal plan for me with grocery lists and recipes. I’m in. I love it. These meals are aligned with my health goals and are within my budget. Sign the contract, pay the fee. WOOP WOOP!

But then, once the chef presents the meal plan, grocery lists, and recipes, she says, Okay, now you have to let me buy the groceries and prepare the meals, and that’s going to be another $5,000 for the month. She gives me a contract for phase 2 of her services (that details her grocery shopping process, her billing process for how we pay for the groceries, the requirements to have her cook in our home, her substitution policies and scheduling policies, how she’ll handle issues related to meal prep and shopping, etc.).

I say, well, I’m not really sure if I’m ready so I’m going to sit on it. Or, I say, well shoot - I don’t really like that you have X policy related to scheduling or whatever it may be. But she comes back and says, okay, well then, you owe me another $1000 since you didn’t move forward with phase two.

I would be like, HUH? I paid for the service you provided. I didn’t even see the contract or have a contract in place to have you shop and prepare my meals, so what’s the deal?

It’s almost like there would need to be a term in contract one that says “I agree to all terms of the purchasing agreement without seeing it.” And, umm, I don’t know about you, but I’m not signing off on anything like that.

In this case, the chef’s 1st contract would be requiring me to hire her for meal planning and shopping but that term would have to be contingent on me signing the 2nd contract. Because, obviously, the chef is NOT going to provide those in-home services to me unless I sign the contract. So in my non-lawyer brain, I’m wondering, how can you make that term in contract 01 enforceable if it’s contingent on them signing contract 02, a purchasing agreement?

Side note: you can use a purchasing agreement when fees are not contingent upon someone buying through you, although, personally I DO NOT THINK THIS IS A GOOD CUSTOMER EXPERIENCE OR BUSINESS PRACTICE.

As a customer, how can I be legally obligated to something for which I don’t know the contractual terms and requirements (ie: i haven’t seen the contract)? I just don’t think that’s possible and ultimately, it is a bad customer experience to make someone agree to something they don’t fully understand.

Even if someone isn’t into the legal details like I am (the former wedding planner in me must review and try to negotiate ALL contracts, sorry not sorry), it still feels uncomfortable to force someone to enter into a phase of a contract if they do not have full insight into what the next contract phase requires.

Lawyers, if you’re reading, please weigh in.

Then, most importantly, If your interior design fee is based on clients purchasing furnishings through you, do these two things:

Establish a minimum furnishing expenditure and include that specific monetary amount in the contract. Their signature is acknowledgement that they understand they are required to purchase that amount through you.
And then, collect a furnishings retainer prior to presenting the design.

I have worked with designers whose clients had to change plans midway through the project and therefore never went forward with purchasing. And because of how their contracts were written, they were able to collect design fees for services not even rendered and a portion of the revenue they would have made from selling furniture.

THIS IS WHY YOU MUST HAVE A SOLID CONTRACT WRITTEN BY SOMEONE WHO WORKS IN THE INTERIOR DESIGN INDUSTRY.

In this particular designer’s situation, the client is selling the house, so I understand, from the client's perspective, that investing in custom furnishings may not be a smart move. But, if I’m the client, and I have signed a complete contract and fully understand that I am required to purchase everything presented, I also understand that I will owe the designer a fee if I break the contract.

That is common sense.

You break a contract, you get in trouble.

So, in short: update your contract terms and present only ONE contract prior to someone becoming a client. Include a minimum furnishings expenditure AND collect a retainer if your design fee pricing is contingent on your client purchasing through you.