(Note: This information continues to be some of the most requested, so I thought I would share this article again.)
Once you’ve found a licensing agent you want to work with, you’ll need to know what items must be in a contract between you and a licensing agent. It’s easy to get excited about the prospect of finally signing with an agent and forget to make sure that the contract is not only fair to both of you, but includes everything you need. I remind you, this is not a legal document or intended to be legal advice. Instead, this as a guide to prepare yourself for understanding and negotiating the terms of your Art Licensing Agent Agreement.
Art Licensing Agent Agreements should include:
1) Complete Contact Information—For both the agency and artist.
2) Grant of Rights—Also sometimes called the Appointment, it spells out what are you giving the agent the right to do, such as license, market and distribute your copyrighted artwork to manufacturers in certain product categories.
a. Here you also define your “Works”, which describes the art pieces or collections included under the agreement. This is one of the most important areas, especially if you have multiple styles or prior collections/assets.
b. This section is where the contract should note any restrictions to the general ‘Grant of Rights’ such as excluded product categories or existing deals with different conditions.
3) Term— List how long the term is with the starting and ending dates, plus the renewal terms and conditions (automatic, benchmarks or renegotiated renewal).
4) Territory—Most agencies will want worldwide rights for several reasons, which might include: the ability for manufacturers to include internet sales, or because their marketing efforts may attract deals in other countries and the agent would prefer to handle those deals. Make your own judgment call as to what rights to give your agent based on their needs and reach; be sure to reserve any rights you can that won’t be actively used.
5) Scope of Agency—Specify here whether the rights are exclusive or non-exclusive and describe in detail the agent obligations. Make sure you describe the process in which the artist (licensor) will be presented the License Agreements and will approve them. For example, will you be required to agree to any terms the agency negotiates or can you turn down deals you don’t find acceptable. And what would the definition of ‘acceptable’ be? I also like to see a good description of the marketing and sales process in the Agreement, so there are no questions as to how the agency will be spending their time on your behalf.
6) Artist Obligations – Now the tables are turned and there needs to be a very specific description of your obligations, such as what type of art you will provide to manufacturers and how often you will create and provide new collections for the agent to market.
7) Credit/Copyright Notice—Make sure the contract states that you continue to own all copyrights and that credit will be provided on all products; then include exactly what the copyright notice will read, such as ©___Artist’s name_____.
8) Commissions—This simply defines who receives what percentage of the royalty revenue generated.
9) Billing and Collection—Though agents are usually responsible for the billing and collection of payments and royalties generated by the License Agreements, put it in writing. In addition, make sure to describe what will happen if money is not collected from a Licensee.
10) Payments—Clarify exactly when payments received by agent will be paid to the artist. I wouldn’t expect less than 30 days, nor accept more than 90 days.
11) Expenses—Clearly spell out what expenses are the responsibility of the agent and of the artist. I suggest you pay close attention to trade shows, travel, legal fees, and production of sales materials, where there may be additional fees and expenses charged.
12) Inspection of the Books and Records—The industry standard is that the agent keeps the books and records and the artist can inspect them with reasonable notice to the agent.
13) Representations and Warranties—Here is where the artist guarantees that you are/will be the sole and original author/owner of the artwork.
14) Indemnification—It is common for the artist to indemnify the agent and its employees, to hold them harmless against certain loss, damage, liability or expenses; reasonable and mutual indemnification is preferred.
15) Default and Termination—There are three important areas you need to make sure are addressed in this section:
a. Language about what happens in case of bankruptcy,
b. Breach of Contract, so that if either party fails to perform any of its obligations the other party will have the right to terminate the Agreement upon thirty days written notice if the breach cannot be corrected within the time frame,
c. and the Effect of Termination, which specifically describes what happens when the contract ends (who gets paid what and when and for how long…this is also known as the tail of the contract).
16) Assignment—I recommend this state that the Agreement shall not be assigned by either of the parties without prior written approval from the other party. This is an important clause because it protects you if an agency gets sold, or is taken over by another company, and prevents your art from being considered an asset of the agency.
If you have discussed the terms you want with your agent, then just make sure they are spelled out in your agreement. Don’t accept the first contract you are given without understanding all the obligations and ramifications of each clause. It may be your first and the most important contract you will ever sign.
I believe contracts are meant to be put away, and hopefully as things go smoothly, never looked at again. But their details are critically important and must in place should there be any questions.