Over the last couple of months, these columns have addressed the dos and don’ts of celebrity endorsements. But what about the celebrity who doesn’t want just to endorse your brand but to create new products under the celebrity’s own brand? While the financial details of the arrangement may be forefront on your mind, many other items can also make or break the deal.
First, it is important to understand exactly what you want to accomplish and for how long. Do you want to capitalize on the “it” celebrity of the moment but you don’t expect the celebrity’s appeal to last long? Or is this something that you see growing and flourishing for many years to come? Who is the target audience; will they grow with the product line or will they move on to a more sophisticated or mature line? These and other considerations will influence the structure of your venture—ranging from establishing a short-term contractual relationship with opportunities to renew to forming a corporation or limited liability company together.
You should also think about what each party will bring to the relationship. Presumably, the celebrity is bringing his or her name. Will the product packaging bear the celebrity’s picture? Does the celebrity have trademarks you want to use? What kind of intellectual property licensing will you need?
Consider the extent to which the celebrity wants to be, or can be, involved in the creative process. If the desire is there, does the celebrity actually have creative ideas to bring to the table? Also consider what level of control the celebrity will be given over operations, including marketing, sourcing, manufacturing, sales, distribution and quality control. For example, will the celebrity have the ability to prevent you from using workers in a third world country where the same celebrity is actively speaking out against substandard working conditions?
Whether you are discussing the creative components or the business operations, whose decision will reign supreme? If neither of you is willing to cede control to the other, how will any deadlock be broken?
Consider, too, how you want the celebrity to endorse the brand and whether this will be part of the overall venture or a separate arrangement. Either way, you will need to think about and agree upon all of the issues that arise in connection with a celebrity endorsement. (See prior columns.)
Make sure that you address exclusivity directly and clearly. Anyone who has read about J.C. Penney’s plan to launch a Martha Stewart brand and the brouhaha that caused at Macy’s knows a thing or two about the issues that can arise even if you have a well-drafted and well-thought-out exclusivity clause. It’s human nature to want to find a loophole.
Finally, make plain what will happen if the business relationship goes south. Will either or both of you be able to continue to use the brand or must one or both of you stop? Do these terms last forever, or for a limited time?
If there’s one truism about celebrities and fame it’s that you can never predict the future. But with proper attention to these issues and to the drafting details, you will be a long way down the road to a beautiful relationship.
Kristi Davidson is a shareholder in the New York City office of Buchanan Ingersoll & Rooney. She has many clients in the home goods and consumer products industry. She can be reached at email@example.com.
Editor’s Note: The comments are those of the author and are not necessarily views shared by HFN or Macfadden Communications.