"The big worry we have is young kids and their parents getting carried away and committing to an agent on terms that are completely unreasonable," he told the Herald on Sunday.
"We've got kids signing five, six-year agency agreements. Our belief is no kid at school should sign any agency agreement."
Nichol is also calling on schools to be more vigilant. The sight of talent scouts lining the sidelines at major school rugby clashes is becoming more common.
While details are difficult to pin down the Herald on Sunday has learnt that deals in the upper range might include club visits in Australia, a few thousand dollars and, in the case of Roger Tuivasa-Sheck before he signed with Sydney Roosters, the promise of relocation for the family.
At the lower end, however, kids are being signed to agents for a couple of hundred dollars worth of gear and the vague promise that they are "on the radar" of a club.
It is a process one agent described as "whitebaiting", in that you scoop up as much talent as possible and it doesn't matter if the odd one falls out along the way.
"I don't sign an agreement that binds me to my accountant ... so why on earth would the New Zealand education system be comfortable about kids at school signing six-agreements with someone giving them the rights to commercialise a minor," one agent said.
"It's absolutely disgusting. The rugby league agents that come in are a real worry in that sense."
Nichol has sounded the warning as part of the Herald's The Book of Rugby series exploring rugby's place in the national psyche.
Nichol was anxious to point out that school sport is an overwhelmingly positive experience and teaches kids many things like resilience and camaraderie that is hard to learn in a classroom.
But the increasing importance of school sport, particularly rugby, has dragged many of the less welcome aspects of professionalism through the gates.
Player agent Daniel Kane, who works for global player management firm Esportif, said the reality was that they were working in a competitive market with finite resources.
"No question about it. Nobody calls you. You've got to be proactive," he said of the search for talent.
While Esportif are accredited agents who are allowed "through the front door of schools", he said there were plenty who preferred the back-door approach and that was a concern for everyone in the industry.
"The NRL is the biggest concern. They're aggressive," Kane said. "They're targeting even below the 1st XV level. They're securing these families and... that's when the agency commitment comes in."
Geoff Moon, the coach of last year's national champion Mt Albert Grammar side said it was not uncommon to see agents approaching parents after games.
"We have rugby league looking for 14 year olds in schools, trying to tie them up until post-school. We have rogue agents in the sidelines, talking to naïve parents in the carparks.
"Professional rugby has put the race for talent a lot younger. League, as a result, has gone ridiculously young," he said.
