March 22, 2022  Published by

Whenever creators are negotiating sponsorships, it can be extremely tricky, especially if they are inexperienced with contracts. There’s nothing more daunting than looking forward to working with a brand, only to receive a long-winded contract filled with legalese terms that may cause confusion.

Alexander Melendez, our content creator and gaming agent and licensed attorney based in New Jersey breaks it down and lists his top five things to look out for in sponsorship contracts!

  1. Usage of your name and likeness in perpetuity

Creators have worked extremely hard to build their image and create value. Brands know this and see the value in owning the name and likeness of a creator. Many times in contracts, I have seen the language “usage of name and likeness in perpetuity.” This essentially means that brands could use your image FOREVER, even after the deal ends. Your image has value, and if brands want that right they should either pay more for it, or only license to use it for the duration of the contract. A solution is proposing brands change the language to “usage of name and likeness for the usage of this term.” You wouldn’t want to sign a contract and see your name and image being used after you ended a relationship with a brand, which is why it is important to look out for these in contracts.

  1. Termination without a chance to remedy breach of contract

There are usually a lot of deliverables in contracts, and sometimes, contracts have clauses where the brand can terminate for any reason, with no chance for the creator to remedy said breach or receive any payment for previous work. Some contracts will have the creator make, let’s say for example, ten deliverables, and if the tenth deliverable isn’t met, the creator will not receive any payment for the other nine. It is extremely important to make sure that you are covered for your part of the contract delivered, and if not, you have a chance to remedy the breach within a certain timeline/x amount of days.

  1. Penalties for a breach of contract

One time I was reading over a contract worth $3000 USD and there was a clause that had a $100,000 USD penalty for a breach of contract— which is unconscionable in itself. Always pay attention to breach of contracts and the penalties that come with it!

  1. Non-compete with other brands

There are some contracts where a brand will not let you market any other brand while you work for them. Sometimes this makes sense, but other times it can be more of a handicap than anything else. For example, I have seen contracts where brands will not let you partner with another brand for another six months post-contract. It is important that if another brand does not let you compete with any brand that is similar, they compensate you for the opportunity lost. If they want exclusivity, they are taking away chances to make money elsewhere, so it is important that you are compensated for that. Furthermore, make sure the time to compete elsewhere, post-contract, is reasonable! Perhaps a few weeks or so.

  1. Intellectual Property (IP) rights

One thing to be very clear of is who owns the IP that is created. Is it the creator’s IP or is it the brand’s right to use for whatever purpose they want? Make sure the scope is clearly defined: who owns the IP and the content created? How long can it be used for post agreement? Again, watch out for the perpetuity language.

Hopefully these five tips will help you the next time you read a contract. The best thing you can do is hire an attorney or someone in the content creation space like an agent or manager who is experienced in reading said contracts. Always be careful of ambiguous terms or broad and over inclusive clauses. Never skip over something just because you don’t understand it. Always know what you are signing before you put that pen to paper.

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