Merchandising agreement for celebrities
- John Deane
- Updated: Mon, 12th Dec 2016
Our client had recently won two merchandising agreements. He wanted our advice as to how to operate them. The first involved promotional material for a young, up-coming actress. The second involved merchandising for an established pair of celebrities with a significant social media & online following.
Merchandising agreement – protecting against risks
We were instructed, and:
- Prepared two bespoke merchandising agreements.
- Ensured our client obtained the full rights to use the trade marks and brands of the individuals.
- Updated the corporate structure of our client to reflect the change in the business’s direction.
Merchandising agreement: the actress
We proposed a merchandising agreement with the actress. That agreement permitted our client to use the personal branding and trade marks the actress had already registered. That was granted in return for a royalty fee under licence. Our client had the right to display the actress’s branding on the following:
The merchandise agreement enabled our client to promote these products through the actress’s social media presence and website, which required her express approval. We defined the product types, how they would be manufactured, and the distribution channels. We protected our client by including exclusivity provisions and a non-compete period if the agreement terminated.
Operating a merchandising model
The merchandising agreement required our client to sub-contract the design and production of products. We therefore defined who owned any intellectual property created by the design consultants. The risk was that consultants might claim ownership of any intellectual property created whilst working with our client. Hence we prepared template assignment agreements that could be repeated as each new designer or consultant was commissioned.
The products are now on sale in department stores and sales are increasing.
Merchandising agreement: the celebrities
The merchandising agreement for the pair of celebrities involved different issues. The celebrities had worked with other agents, and there were issues to resolve. The key requirement was an agreement where the IP owned by each celebrity could be:
- Blended to form individual merchandise products; or
- Combined to form products promoting the pair as one.
The royalty schedule required particular care and attention. We reviewed the trade marks and incorporated into the licence a right of use and rights to defend infringements. We advised on the registration of new trade marks relating to the duo.
Merchandising agreements: key terms
Parties to any merchandise licence agreement want important issues clearly stated. For example, terms relating to what:
- Works are being licensed;
- Products will be produced using the works;
- Royalties will be paid.
Licensees usually want clauses defining:
- Restrictions preventing the Licensor licensing the same IP rights to a competitor;
- That the Licensor promotes the products.
Licensors usually want clauses defining:
- The product quality;
- The manner of any promotion.
Managing our client’s growth
Our client was growing, new shareholders were joining the business. Our client wanted to preserve the goodwill associated with the business. To regulate the running of the business, the relationship between the directors and shareholders, the shareholdings, and the eventual sale of the company we created:
John Deane is a partner in the commercial team. John works with businesses and individuals in the creative sectors. There are opportunities, but they come with risks. Our job is to reduce those risks to keep all parties onside.