Mark Pestronk
Q: Now that business is starting to pick up again, I am thinking of trying to charge my clients an annual retainer fee for travel counseling and booking. The fee will be nonrefundable and payable in advance. It will not only be good for my cash flow but also reestablish my professional reputation in the high-end, specialized travel niche for which most of my clients come to me. Have you heard of such a fee? Is it legal? Does it increase my legal duties to the client? Do I need a written contract with each client for the fee?
A: Although such arrangements as you describe are uncommon, several of my clients do have them. An agency that perhaps pioneered this arrangement is Fischer Travel in New York, whose fees were mentioned in a June 2019 Travel Weekly article here.
Nonrefundable fees that are paid in advance are perfectly legal. You can also impose whatever additional terms and conditions you like, as long as the client agrees to them. For example, you could provide that the fee is good for X hours of work on the client's behalf and then charge more fees for more hours worked on a project, just as big law firms do. You could also even provide for automatic renewal of the annual fee.
The sole exception to legality is that, if you are an independent contractor of a host agency that is registered as a seller of travel in California, Florida or Washington state and the host lists you on its annual renewal application as exempt from registration, you cannot collect fees directly from clients in those states.
The way around this prohibition is simple: If you are successful enough to be able to charge retainer fees, then you should register as a seller of travel in your own right in those states.
The duties of a travel advisor do not depend on how or how much you are paid for your services, nor do they depend on whether clients or suppliers, or both, pay you. Therefore, charging fees does not increase your duty to clients.
All travel advisors have a legal duty to a) make the arrangements requested or agreed to by the client with care and b) warn clients about dangers that are known or should be known to them but that the client would not necessarily know about. The degree of care required and the degree to which you must warn clients does not vary with what you charge (if anything).
Since your fee will be nonrefundable, it is essential that you have a written contract to spell that out and to maintain evidence of the client's agreement to the terms; otherwise, you could not fight a credit card chargeback.
While you should get a knowledgeable attorney to draft or review your client agreement, you can get a head start by taking the sample disclaimer agreement found at www.pestronk.com/resources and then adding your retainer terms and conditions.