Merchandising agreement for celebrities

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Gannons helped a celebrity agent manage their newly won merchandising agreements.

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-and-coming actress. The second involved merchandising for an established pair of celebrities with a significant social media and online following.

Merchandising agreement – protecting against risks

After our client instructed us, we then prepared two bespoke merchandising agreements for him. Then we ensured that our client obtained the full rights to use the trademarks and brands of the individuals. Finally, we 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. This agreement permitted our client to use the personal branding and trade marks that the actress had already registered. This was granted in return for a royalty fee, under licence. Our client also had the right to display the actress’s branding on the merchandise including mugs, calendars, and T-shirts.

The merchandise agreement enabled our client to promote these products through the actress’ social media channels and website. This required her express approval. We defined the product types, and both the manufacturing methods, and distribution channels for the products. We protected our client by including exclusivity provisions and a non-compete period if the agreement terminated.

Operating a merchandising agreement 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 for our client. Producing such templates enabled our client to easily apply the agreements to any new designers or consultants that he 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 either 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 trademarks and incorporated into the licence a right of use, and rights to defend infringements. We also advised on the registration of new trademarks relating to the duo.

Merchandising agreements: key terms

Parties to any merchandise licence agreement want critical issues clearly stated in the terms of the agreement. For example, they want clarity over any works that the agreement licenses. They also would want to know exactly what merchandise will be produced using their licensed works or identity. Finally, it is important to state the royalties that they the agreement entitles them to.

Licensees usually want clauses defining restrictions preventing the licensor licensing the same IP rights to a competitor. Also, clauses that force the licensor to promote the products.

Licensors usually want clauses defining the quality of the product quality, and 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 help in regulating the running of the business, the relationship between the directors and shareholders, the shareholdings, and the eventual sale of the company we drafted bespoke corporate documents for our client. These included the terms of a shareholders’ agreement, the structure of new articles and the director service agreements.

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.

  • I cannot recommend Gannons enough after the thorough and professional work they did for me.