Fractional Executive Agreement Checklist: 15 Terms to Settle Before Day One

By Andreas Pettersson, Founder, Leaders ADAPT

The interview goes well. The fractional executive is sharp, has done the job before, and you want them in the building on Tuesday. Someone pulls a consulting template off the shared drive, changes the name at the top, and both sides sign. Three months later you discover that nobody agreed who can sign a supplier contract, who owns the pricing model, or what happens to the shared login when the engagement ends.

I have been on both sides of these agreements, as the CEO who signed them and as the part time executive who worked under them. The template is almost never the problem. The missing terms are. A consultant gives advice. A fractional executive makes decisions, manages people and touches your systems, and the paper has to say so.

A fractional executive agreement is the contract that sets what a part time senior leader owns, how much of the week they give, what they may decide or sign, how they are paid, what the company keeps, and how the seat is handed back when it ends. Fifteen terms cover it. This page is the checklist.

The 15 terms at a glance

If you read nothing else, read this table. Each term answers a question that will come up in the engagement anyway. The only choice is whether it comes up in the agreement or in an argument.

If you want the mechanics of the engagement itself, the first call, the 90 day plan and the reporting rhythm, read how fractional engagements work. This page is only about the paper.

Terms 1 to 5: the work, the time and the money

1. Scope and outcomes. Write the seat and the two or three outcomes that would make the next six months worth paying for. Not a job description copied from a recruiter. One line per outcome, measurable, with a date. Then write what is out of scope. A fractional COO who is not responsible for the sales team should see that sentence in the agreement, because the first time the pipeline dips, someone will ask.

2. Time commitment. Days per week, which days, and what reachable means on the other days. I prefer fixed days over a bank of hours, because a bank of hours leaks into evening email. The agreement should also say what happens when the work needs more time than the contract allows: who decides, and whether it is a scope change or simply absorbed. If the seat needs more than three days a week every week, you are probably looking at an interim role, and the fractional vs interim vs advisory comparison draws that line.

3. Term and notice. A start date, a first formal review date, and a notice period for each side. The number of days matters less than what fills them. A notice period with no handover list is just a countdown.

4. Fee shape. Write down how the person is paid: fixed monthly, day rate or hourly, when invoices go out, when they are due, and what happens to fees when the scope changes mid month. Every element of pay belongs in the agreement. Nothing promised over dinner, nothing left to a later conversation. For market ranges by seat, our fractional executive cost page puts the numbers side by side.

5. Expenses. Travel, software, subscriptions and the occasional dinner with a lender. Write what is reimbursable, the approval threshold, and the deadline for submitting receipts. Small, and still one of the most common sources of friction.

Terms 6 to 10: authority, reporting and protection

6. Authority and signing limits. This is the term most templates leave out, and the one that bites hardest. Can the fractional CFO move money between accounts? Can the fractional COO sign a supplier contract, and up to what amount? Can either of them hire or let someone go without the owner? Write a short authority table with dollar limits, and match it to what the bank, the payroll system and your suppliers actually allow. An executive with no authority is an advisor with a title. An executive with unlimited authority three days a week is a risk.

7. Reporting line. Name who the executive reports to, usually the owner, and who reports to them. If the fractional COO manages the operations lead, the operations lead should hear it from the owner, not from the org chart. Write the cadence of the owner check in as well. A reporting line without a standing meeting is a theory.

8. Confidentiality. Define what is confidential, how long the obligation lasts after the engagement ends, and what the executive must return or destroy on the last day. Fractional executives work with several companies. That is the point of the model, and the reason this clause should be specific rather than boilerplate.

9. Ownership of work product. The pricing model, the 13 week cash forecast, the operating manual and the board deck should belong to the company. Do not assume they do. The US Copyright Office explains that a contractor's work is a work made for hire only if it falls into one of nine narrow categories and there is a written agreement, signed by all parties, that expressly says so. Most of what a fractional executive builds will not fit those categories cleanly. Ask your lawyer for an explicit ownership clause that covers models, documents, code and processes, and carve out the executive's own general know how so the clause is fair.

10. Nonsolicitation. A nonsolicitation clause, in the words of Cornell's legal dictionary, limits a person from soliciting specified customers, clients, employees, or other business relationships. The same page notes that enforceability is primarily a matter of state law and varies considerably, and that courts look at duration, scope and whether the restriction goes further than needed. Keep it narrow: your employees and your named customers, for a defined period. On noncompetes, the national picture changed. In September 2025 the FTC voted 3 to 1 to dismiss its appeals and accede to the vacatur of its Non-Compete Clause Rule. For a part time executive who serves other companies by design, a broad noncompete rarely makes sense anyway. Ask a lawyer in your state what holds.

Terms 11 to 15: risk, status and the exit

11. Insurance and indemnification. If the fractional executive acts as an officer, signs for the company or makes management decisions, find out whether your directors and officers policy covers them. Cornell lists directors and officers (D&O) liability among the common forms of liability insurance, with coverage that can reach management related wrongful acts depending on the policy. Do not assume a contractor is inside that policy. Ask your broker and get the answer in writing. Then decide the indemnification clause, the part where, in Cornell's plain description, one party commits to compensate another party for loss or damage. Who covers whom, for what, and up to what limit. Also ask whether the executive carries their own professional liability cover.

12. Worker classification. Most fractional executives are independent contractors. The agreement does not make that true. The IRS weighs three groups of facts: behavioral control, financial control and the relationship of the parties, and you can file Form SS-8 if you want the IRS to decide a specific case. The Department of Labor is blunter. Under federal wage law, any label given to the relationship, even in a signed agreement, is irrelevant, and the question is whether the person is economically dependent on you or in business for themselves. A part timer with set hours, your laptop, your benefits and no end date starts to look like an employee. Talk to your accountant before day one, not after the audit letter.

13. Data and system access. List the systems the executive needs: the ledger, the bank portal, the CRM, the drive, the payroll tool. Give named accounts, never shared passwords, with the lowest rights that do the job. Write which AI tools may touch company data and which may not. Then write the date access ends and who removes it. A forgotten login is a quieter risk than a bad decision, and it lasts longer.

14. Exit handover. The handover list belongs in the agreement, not in a goodbye email. Documents, models, passwords, open decisions, vendor relationships, and a short written note on what the next person should know. Name who receives it, the team member or the full time hire, and whether there is a paid overlap. A fractional executive who builds the seat well should be able to hand it over in two weeks. If they cannot, the work lived in their head, and that is the real finding.

15. Conflicts of interest. Ask who else the executive serves, now and during the term. Require disclosure of any new client in your market, and any payment from a vendor they recommend to you. A good fractional executive will volunteer this. Put it in writing anyway, because the person who signs the agreement is not always the person who remembers it a year later.

Where AI fits in a fractional executive agreement

AI helps in three places, and it raises one new term.

First, preparation. An AI assistant can compare your draft against this checklist and flag the missing terms in minutes. That is a useful first pass before the lawyer, not a replacement for one.

Second, the authority table and the handover list. Both are tedious to write and easy to draft from the executive's own notes. A company knowledge system, the kind we build with leadership teams, keeps the reasoning behind decisions after the seat ends. For owners on an EOS style rhythm, our guide to AI for EOS companies shows where that sits in the quarter.

Third, the new term. Fractional executives bring their own AI tools. The agreement should say which tools may process company data, whether prompts and outputs are retained by the vendor, and that outputs built for you belong to you under term 9.

What AI should not do is decide the terms. How much authority to give, whether to accept a narrower nonsolicit, when to end the engagement. Those are judgment calls, and our page on what not to delegate to AI is the longer version of that argument.

What a fractional executive agreement does not fix

I say this on the first call, because it saves a year.

A good agreement does not fix vague outcomes. If you cannot write the two or three things that must be different in six months, no clause will rescue the engagement. Write the outcomes before you open the template.

It does not fix an owner who will not let go. You can give the fractional COO a signing limit of fifty thousand dollars, and if every decision still routes back to you, the limit is decoration. The delegation boomerang is a leadership problem before it is a contract problem.

It does not fix a leadership team that cannot run a meeting without you. A part time executive can model the rhythm. The team has to own it, which is the work of leadership team development, and why I pair most fractional seats with work on the owner and the team.

It does not replace a lawyer. This checklist tells you what to ask. A lawyer who knows your state tells you what holds.

Who is on the bench for this

Every engagement runs through Leaders ADAPT. I take the first call, match the partner, and stay accountable for the outcome. The executives below work under that arrangement, and each of them works to the fifteen terms above.

Steve Shaw sits in the CFO seat on the bench. Steve has twenty years in finance leadership and works with owners on clean books, cash discipline, financial positioning before a sale, and the numbers conversation with buyers and lenders. He is usually the seat where authority limits and bank signatures matter most, and he takes COO seats too when the operating problem is finance led. Our fractional CFO first 90 days page shows what that seat looks like after the paper is signed.

Chris Geddes and Marina St. Cyr cover the COO seat. Chris is an operator who pairs operations leadership with AI transformation work in owner led companies. Marina is detail strong and runs the cadence and the follow through, the person who makes sure the handover list exists long before the last day.

Sergey Dmitriev is the fractional CTO and AI systems partner. When term 13 gets complicated, which systems, which rights, which AI tools, Sergey sets it up properly, and he trains leadership teams on AI tools with me.

Steve Prodger is the fractional Chief Revenue Officer. He builds revenue engines and pipeline discipline for owner led companies, and the customer side of the nonsolicit clause matters most in his seat.

Thor Legvold is the leadership psychologist on the bench. He works on executive fit and team dynamics, which is where most engagements succeed or fail long before anyone reads the agreement again.

The full list of seats is on fractional executive services.

Fractional Executive Agreement FAQ

What should a fractional executive agreement include?

At minimum, fifteen terms. Scope and outcomes, time commitment, term and notice, fee shape, expenses, authority and signing limits, reporting line, confidentiality, ownership of work product, nonsolicitation, insurance and indemnification, worker classification, data and system access, the exit handover, and conflicts of interest. Each one answers a question that will come up anyway. Writing it down first is cheaper than arguing about it later.

Is a fractional executive an employee or an independent contractor?

Usually a contractor, but the agreement does not decide it. The IRS weighs behavioral control, financial control and the relationship of the parties. The Department of Labor says any label given to the relationship, even in a signed agreement, is irrelevant under federal wage law. If the facts look like employment, the paperwork will not save you. Ask your accountant and lawyer.

What notice period is normal in a fractional executive agreement?

There is no single standard. Many consulting agreements default to 30 days, and executive work often needs longer so the seat can be handed over properly. What matters more than the number is that the notice period includes a written handover list and that both sides know what happens to open work, accounts and documents on the last day.

Who owns the work a fractional executive creates?

Only the agreement can make that clear. The US Copyright Office explains that a contractor's work counts as a work made for hire only in narrow categories, with a written agreement signed by both parties that says so. Most of what a fractional executive builds, such as models, plans and process documents, needs an explicit ownership clause. Have a lawyer draft it.

Does a fractional executive need D&O insurance?

If the person will act as an officer, sign on behalf of the company or make management decisions, ask your insurance broker whether your directors and officers policy covers them. Cornell's legal dictionary lists D&O liability among the common forms of liability insurance. Do not assume a contractor is covered. Get the answer in writing before the first board meeting or bank signature.

Can a fractional executive agreement include a noncompete?

It can, but enforceability depends on state law. The FTC's nationwide noncompete rule is no longer in play, because in September 2025 the Commission voted to dismiss its appeals and accept the court decision that struck it down. A narrow nonsolicitation clause is usually a more practical protection for a part time executive who also serves other companies. Ask a lawyer in your state.

Is a fractional executive agreement the same as a consulting agreement?

It often starts from the same template, but it covers more. A consultant advises. A fractional executive decides, signs, manages people and touches company systems. That means authority limits, reporting lines, insurance, system access and the handover all need terms a standard consulting agreement leaves out. Using the consulting template unchanged is the most common gap I see.

Is this checklist legal advice?

No. It is a working list from an operator who has signed these agreements as the CEO and worked under them as the part time executive. Employment, tax and restrictive covenant law vary by state and change over time. Use the fifteen terms to prepare, then have a lawyer who knows your state review the agreement before anyone signs it.

Read the agreement out loud before day one

The best test I know is simple. Before anyone signs, the owner and the executive read the fifteen terms out loud to each other, in one sitting. Every place where one of you hesitates is a term that is not settled yet.

Tomorrow morning, open the last contractor agreement you signed for a senior person and count how many of the fifteen it covers. If it covers fewer than ten, you know where the next engagement would have gone wrong. Fix the paper before you fix the hire.