An endorsement agreement is a contract between a business and a public figure who is paid to endorse the business’s brand. Such a figure may be a celebrity, athlete, social media influencer or business leader.
These agreements outline the rights of the endorser, how any revenue streams will operate, and issues of insurance both parties need to understand.
Elements to Include in an Endorsement Agreement
Rights and licenses
Firstly, the business must seek permission to use the endorser’s name with their brand. Specifically, this clause allows the business to use the endorser’s name in any advertisement or promotion to do with the product or service.
Royalties
Where an endorser earns a percentage of income generated from the endorsed product (ie royalties), this needs to be documented. It is important to note that this is generally the main source of income for the endorser subject to these agreements.
Appearances
Though the business must obtain permission to use the endorser’s image, the endorser must agree to certain conditions. Importantly, an endorsement agreement will stipulate the number of appearances that the endorser must make in a specified time period. These appearances are normally for promotional and advertising purposes.
Products for the endorser
Generally, the endorser will be supplied, for free, the products that they promote. In this, it is usually acceptable for the endorser to request such products for their own, personal use. Using the products for charitable events are also common requests.
Insurance
Insurance clauses are common in all contracts. Specifically, the business will cover the endorser for the duration of the agreement, in relation to activities concerning the endorsement.
Termination
Lastly, a termination clause provides both parties with a right to terminate the agreement on certain conditions. For the endorser, common reasons for termination may be bankruptcy of either party, failure to make payment, or failure to provide adequate insurance.
Conversely, the business will be able to terminate if the endorser engages in criminal activity, misrepresents the product or breaches any terms of the agreement.
Both parties will need to provide 30 days written notice prior to termination.
To Sum Up
Endorsement agreements, while unique, are quite common in the business world. If you are entering into an endorsement agreement, it is important to understand the rights and requirements of the endorser.
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Daniel is a legal intern at OpenLegal, placed in our legal content team. He is currently studying a Bachelor of Laws at the University of Technology Sydney. Daniel's interest lies in economics and media/startup law.
Phil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.
