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Celebrity Endorsement Agreement

Over a period of time, the celebrity endorsements as a prominent and effective marketing tool by many companies. Typically, a public figure appeared in advertisements and promotional materials marketing the products or services of a company.
But the past few decades has witnessed the evolution of celebrity endorsements "to" mark "where companies look to celebrities as brand ambassadors who have a brand awareness has spread, rather than merely a trade promotion. Celebrity endorsements are usually classified into:
A. traditional endorsements, which involves a celebrity to promote specific goods, relying on the celebrity's fame and the ability to make decisions about buying influence.Kapil Dev's endorsement of Boost in the late 80's is a classic case of a traditional endorsement brings a direct link between a professional cricketer and a leading malt based health drink; B. co-branding or product placement where two separate brands to meet a new co-brand, as in the case of Gatorade Tiger a variety of sports drinks launched by Gatorade as endorsed by Tiger Woods to create; C. licensing, where a celebrity has given its name and features new products and services to create. Probably the most famous example of celebrity licensing is Nike's legendary "Air Jordan" brand of athletic shoes and clothing, and D. joint ventures / equity ratio of agreements, which celebrity shares in the profits of a new venture. In 2007, Sachin Tendulkar said in a joint venture with Future Group and Manipal Group health and sports fitness products began under the brand names "S line" and "Sachs.
This article gives an outline of the structure of a typical celebrity endorsement agreement. It gives an outline of some of the important provisions that should be documented and their base. Eventually, each agreement may differ from this structure and substance based on the trade and other context. Parties - the endorsement agreement at the beginning, clearly identify all parties to the agreement with their individual / corporate status, any other identifying information and their registered addresses, or. This is particularly important in a multi-party agreements that an intermediary such as an agent, marketing agent or management company retained certain marketing rights to celebrity, as it forms the basis for the structuring of the respective duties and responsibilities of the parties. It is important to ensure that the company has the necessary authority to sign and bind the celebrity.
Definitions and interpretation - The agreement should clearly set out a list of definitions to determine or clarify the meaning of important terms in the contract. Since these defined terms appear throughout the Agreement, they are usually capitalized. It is advisable that the meaning of the word in the definitions section cross-check every time it is used in the agreement as his whole meaning, including limitations and exceptions, introduced the provision in which it is used.
Term - This provision will be the duration of the agreement, ie, the length of time that the parties agree are legally required to be described. The term is usually a certain number of months or years. It should be noted that while the endorsement agreement expires at the end of the quarter, there are usually a number of conditions, such as confidentiality, cooling periods, so that the termination or expiration of the agreement survive. It is possible that an initial term, by one or more mechanisms, including the notice of either party, the mutual agreement between the parties and the like can be renewed. In the case of an extension, the extended term as the term of the agreement. It is also advisable to possible extensions to provide for the completion of marketing activities, such as the right to air TV commercials out of term insurance.
Early exit option - many famous endorsement agreements for an initial term of one year, followed by a subsequent options for several additional years, to the discretion of the company endorsed exercised. The rationale is the company's financial risk is limited. Last year, however, witnessed a significant increase in the initial multi-year terms. While such arrangements can lead to a lower annual cost and help in creating a deeper association, business risk associated with a celebrity for a considerable period of time in the face, where risks associated with the celebrity's behavior must be carefully considered. One possible way of an early exit option to pay a "break fee" that the company exercised.
Territory - this provision, the geographical area within which the relevant agreement and which the parties perform their obligations and their rights under the agreement described. It can be a particular city, state, country, region or even worldwide. Along with the provision on the term, the provision in the area take explicit restrictions on the tenure, the size and scope of the rights and obligations created under the agreement.
Services - the section on the consideration of the nature, quantum, method and schedule of payments should be clearly indicated (ie, endorsement / licensing fees / royalties / profits, cash or value in kind of a lump sum payment, up front payment or payments, or a minimum guarantee, etc. are). The triggers and the quantum of payment associated with such speed necessary for mutually determined. It should also clearly indicate the interest rate will apply in the case of late payment.
Often, especially in the case of athletes, based on performance incentives and negotiations arrived. Serena Williams' Nike endorsement for consideration associated with her position and performance at the Grand Slams in addition to a flat endorsement fee. Conversely, companies often negotiate a reduction in payment if the celebrity is not to perform at a certain level, or fails to generate positive publicity. For example, marketing agreements for young cricketers often include a clause stipulating that the consideration payable will be reduced if the player fails a certain number of actions to make the national team during the quarter.
In the event that the compensation depends on sales generated, the company will look to make payments only after deduction of tax, the transaction costs of bad debts, returns (actual and projected). If the endorsement agreement relates to a clothing or equipment manufacturer, is usually the right celebrity predetermined value in kind of goods at a discount to you. Product / Service Category - This provision describes the company's product or service categories that can be endorsed or associated by virtue of the endorsement agreement. The correct definition of this category is also an influence on the size of the company's exclusivity, which often have a general question. It is important to accurately define the category, possibly, there may be myriad sub-categories within a general category, each capable of exclusivity. At the same time, companies need to be aware of the pitfalls of celebrity endorsements, especially when it revealed that the celebrities are not using the products or services that they write.
In the U.S., a lawsuit by a consumer group has forced the sports giant Nike to recognize Tiger Woods not the Nike Tour Accuracy golf balls he approved and that Nike is misleading golfers to think they play with the ball as Woods used.
Exclusivity - This is usually of fundamental importance to the company that the endorsement agreement contains an exclusivity clause, limiting the celebrity that similar services to a competitor. Such restrictions often go further, and prevent the celebrity directly or indirectly to do something that may cause the public to believe that he is associated with a competitor.
The agreement may also prevent the glory of competitive products underwritten for a certain period after the product endorsement agreement has expired because the public would continue to associate the celebrity with the company's trademark.
Defining exclusivity to an endorsement contract must be thoroughly considered in the negotiations. A company must also consider the specific companies that the company does not want the celebrity associated. Furthermore, if the company is not a celebrity in public to do certain things, eg, a competitor's product, etc. contribute as limitations to the exclusivity clause and specifically covered above.
In November 2008 the actor Charlize Theron reportedly has a $ 20 million lawsuit brought by watchmaker Raymond Weil settle claims she violated her endorsement contract by appearing in ads for Mont Blanc watches and making a public appearance wearing A Christine Dior watch at a press event.
Services need - depending on the nature of the product or services and marketing goals, the list of services is unique to each endorsement agreement. It is imperative that the company considers in detail the benefits it would receive and understand the celebrity who is to award and that it is specifically documented in as much detail as possible.
The scope of services provided endorsement by a celebrity can be broadly classified into the nature of the services and media services that can be broadcast or published.The type of services generally within predictable categories in which the performance of the celebrity video (including commercials, infomercials and selling point of the video), radio commercials, print photography, and personal appearances. With regard to personal appearance, it is important to the company's expectations for personal appearance specify.
The most valuable asset in a celebrity endorsement agreement, the number of personal appearance by the celebrity can make. Depending on, among others, the negotiating power of celebrity and incentives involved, the number and length of personal appearance made by the celebrity in any year of the term must be agreed. Such actions can be used for photo and advertising shoots or "meet and greet" sessions, as agreed between the parties. The industry standard for every custom has taken on a day of eight hours for each personal appearance, with the exception of travel time. The company reserves the option to make use of personal appearances in a few days or a half days of four hours each. Furthermore, the company the right to any personal appearances in any given year the term used in a piece to retain, subject to the celebrity's availability.
In light of the celebrity's status and obligations existing endorsement, details on standards of travel (business class), suspension (making luxury cars) and accommodation (5 star) is often in the contract. Normally such costs in full by the company. A potential obstacle in a celebrity endorsement agreement of the scheduling of the celebrity's actions. Celebrity endorsements are almost always subject to the celebrity's obligations in their primary area of ​​involvement. On the other hand, production costs and logistical planning often tend to be very time sensitive and expensive.
The key to negotiations in this regard are the important dates for performances in advance to identify and capture them as firm commitments in the contract. A procedure for reporting appears often useful in confirming schedules. Once the agreement is executed, it is critical to a representative to appoint the liaison with the celebrity's agent. In case of cancellation of pre-agreed dates, the celebrity's agent must be the company with alternative dates, that the company can be part of the consideration retained.
In 2008, the Indian captain MS Dhoni in the sight of a legal storm when Karnataka soaps and Detergents Ltd canceled their endorsement contract with Dhoni and slapped a legal notice to Dhoni for a break. Dhoni has KSDL promised a total of ten personal appearances over two years and was able to meet only three days, without committing to the dates for the rest of the personal appearances.
Retirement, injury, death - a celebrity endorsement agreement must take into account any foreseeable circumstance that affects the celebrity, including death, injury and retirement. For example, the agreement provides that if the celebrity dies or is permanently injured during the term of the agreement, then the company can continue to tell and marketing materials used to the time when the agreement would terminate the course.
Furthermore, if the agreement provides for full ownership by a material as a result of services rendered by the celebrity business, then the celebrity's death may have little or no impact on the agreement if all the services have been performed unless the circumstances of the death could have a negative impact on the brand. The agreement may contain provisions such that in the case of retirement of the celebrity during the term of the agreement, the celebrity is an increase in the number of personal appearances at no additional remuneration.
Insurance - If the famous person's death or permanent injury would program for marketing the company can significantly impair the acquisition of a suitable key person life insurance policy that will risk covers, with the celebrity's consent. Similarly, the U.S. and the UK witnessed an increase in the number of corporations / companies that their investments brands and even their sales to protect when their celebrity endorsers suffer public embarrassment, as in the case of Tiger Woods and Wayne Rooney. Such insurance policies may cover fees paid to celebrities and the costs of producing and discussing the television commercials, print ads and other promotions. Some insurers also the cost of the new ads with the replacement of celebrities.
Right of first offer, right of first refusal and the right to adjust: This is a variety of provisions that the parties to their relationship beyond the original scope, term or territory to continue. Under the Indian legal precedent, the rights of the company an initial offer (for a third party) to make the right match with a third party making the offer or any other similar law have to be enjoyed during the payment of the Agreement and after termination of expiration thereof. While bias of the parties to their relationship to continue, the provisions of this nature known and allow the company to go to the market for independent financial valuation. It is often hotly-disputed provisions in an endorsement agreement as they have the commercial freedom of the familiar in the future. At the same time, they can be valuable to businesses and celebrities who want longer term relationships that have some long term certainty to both.
Intellectual Property - This provision is generally given the company a limited right and license to the celebrity's intellectual property (name, image, likeness, signature, properties, etc.). And that sets out each party the other party's intellectual respect property and Proprietary interests. This is a standard provision in all contracts and endorsement must be carefully drafted to be some confusion about the extent of avoidance. It should also clarify the ownership of intellectual property created during the tenure of the relationship, either individually by either party or jointly by the parties. The celebrity must also retain the right to remove any promotional material and advertising that shows the celebrity's name or other identification prior approve.
Business / limitations - This section is important because it is often the details that Contracting Parties undertake to honor the agreement between or among them.Factors like the term, the volume of services provided, and the consideration usually determines the level of restrictions imposed on the work of the famous. For example, the agreement requires the withholding of celebrity, especially in high-risk activities to take part. The agreement may even be as far as requiring the celebrity charge that he is in good health and that he will take all necessary steps to ensure that he remains in good health.
Most companies specify a list of their competitors or competitive product categories at the time of negotiating the agreement. As such, this part of the contract typically forces the celebrity support, directly or indirectly, the products of a competitor (or its subsidiaries). It is also in the interests of the celebrity's to ensure that the company honor certain obligations under the contract.
Usually this will include terms such as not publishing any content, photos or promotional material with the celebrity without permission public comment on the relationship without the other party's consent, not with the other party's intellectual property outside the scope of licenses granted and other terms that help the parties maintain mutual respect and properly the extent of their relationship together.
This kind of restrictions must be coupled with a clear determination on the impact of the offense, and what damage can be recovered by the company.
Values ​​Clause - To guard against the risk that a celebrity's commercial value can be damaged by the misconduct, endorsement contracts generally include morality or morals clauses. These clauses allow the company the endorsement agreement terminates if the celebrity fades his or her image or the image of the company or its products and services. This may relate to situations such as convictions for any offense involving dishonesty, violence or illegal drugs or the use of the lyrics, actions or public statements violence, humiliating blow to or discriminate against any person or group.
Prominent examples include Kellogg's decision to opt out of a contract extension with Michael Phelps after the photos emerged with a bong of Phelps, on the basis that such behavior is inconsistent with the company's brand image. Similarly, Nutella and McDonald decided to continue their association with basketball superstar Kobe Bryant, after he faced allegations of sexual assault.
A brand that stands out, however, for the treatment of athletes in violation of the morals clause is Nike. In July 2011 the company officially re-signed American football quarterback Michael Vick, after time in prison for his involvement in an illegal dog fighting ring served. This is particularly striking considering this is the first time a sponsor has ever brought back an athlete after the fall of the athlete from the previous marketing.
Conversely, inverted moral clauses that allow the celebrity endorsement of the agreement is terminated if the company committed a kind of corporate abuse, as outlined in the contract. In the modern context, this clause has its origins in the spectacular collapse of Enron. The Houston Astros have $ 2.1 million to pay Enron's name to wipe out their stadium for the energy broker collapsed in scandal. More recently, Dash Dolls LLC, terminated the agreement for the co-branded "cards Kardashian" to the Attorney General of Connecticut launched investigations into the card for a high and hidden costs and focus on young adults.
Representations, warranties - This part of the agreement will typically generic, with the possibility of a few additions depending on the context. It will generally be an assurance that both parties within their right to capacity to enter into the contract that they do have the right and the ability to be granted the rights granted and obligations committed toperformed, and that no conflicting contractual or legal obligations (and shall not in such contracts or obligations) the nature and scope of the agreement entered into in jeopardy.
A performance is defined as an account of the statement of the facts, allegations, or arguments. Representations present everything from its past to its present status. A warrant is generally moving from the present into the future. The obligation to ensure both parties to the terms of the contract. Usually, both parties guarantee to enter into any such agreement in the future that their ability to their obligations to perform under the sponsorship agreement would interfere. When a contract uses the terms "representation" and "guarantees" together, mix them past, present and future together in terms of the contract. The extent of the representations and warranties may also have an impact on the indemnity rights of the parties.
A performance is defined as an account of the statement of the facts, allegations, or arguments. Representations present everything from its past to its present status. A warrant is generally moving from the present into the future. The obligation to ensure both parties to the terms of the contract. Usually, both parties guarantee to enter into any such agreement in the future that their ability to their obligations to perform under the sponsorship agreement would interfere. When a contract uses the terms "representation" and "guarantees" together, mix them past, present and future together in terms of the contract. The extent of the representations and warranties may also have an impact on the indemnity rights of the parties. Impairment - This is often the parties that the endorsement is dynamic in nature and that circumstances can change the delivery of all dedicated rights and claims (including the dedicated number of known appearances) impossible or impossible to understand. To this extent, it is advisable to provisions relating to the impairment of the rights that were the basis for terminating the contract. These terms are often an opportunity for the renegotiation of the benefits / fees and / or replacement of an equivalent benefit for those not rendered or not rendered in state. Often a third party agency or an industry expert is made for the relative valuation of the delivered and undelivered benefits and the value of the replacement benefits. The outline of the process and / or the inability or unwillingness of the parties mutually agree on impairment drugs may eventually provide a basis for terminating the agreement.
Termination and its consequences - Each contract will generally the circumstances under which they can before the expiration of the term is terminated. This is a contract will generally come to an end when it is considered fully executed, or when at the end of his term came. But usually if a material breach of the endorsement agreement, the party that breaches of the agreement may be considered, the failure to its promise.Consequently, the other party the contract may be terminated. This may occur if the company makes timely payment, or if the celebrity is not properly the services to the company. Sometimes, a company can choose the endorsement agreements, which are directly linked to duration of the period that remains the celebrity prominent and favorable in the public eye.
It is important to lay down the consequences of termination. Often the results include proportional payment or reimbursement of the endorsement fee. Depending on the substance and circumstances of the offense, the parties agree on a full refund.Regarding the failure to endorsement fees or royalties to pay a money suit is often the only available means to end. In the other case `s substantive deliverables, specific performance can an alternative to termination investigated.
In essence, the impact of the termination can also serve as a deterrent to any of the parties to the agreement to prevent the termination of the agreement for no good reason. It is also important to note that contract law is not in favor "penalties for the violation not related to the actual loss or damage and therefore the nomination of wound penalties, regardless of the circumstances, is rarely recommended.
Miscellaneous provisions - the celebrity endorsement agreement a number of different standard conditions is an important part of any contract, including the list:

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