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Drafting With the Stars: Celebrity Endorsement Agreements
Practical Law Legal Update w-004-1279 (Approx. 3 pages)
Drafting With the Stars: Celebrity Endorsement Agreements
by Practical Law
| Published on 31 Oct 2016 • USA (National/Federal) |
This Legal Update highlights key considerations when drafting and negotiating celebrity endorsement agreements.
Love them or hate them, celebrities are influential, aspirational, and marketable. Using celebrities as brand ambassadors can stimulate consumer engagement, lend credibility to the brand, and create a sense of relevancy in the eyes of the consumer. However, as valuable as these relationships can be, there are substantial risks associated with celebrity endorsement arrangements, including:
- Damage to the company's reputation if, for example, the celebrity commits a crime, engages in immoral behavior, or makes insensitive or embarrassing statements.
- Loss of credibility with relevant customers if the endorser fails to maintain her celebrity status or the skills and talents that built her career.
- Overexposure of the celebrity if she endorses too many products or services at the same time or makes too many media appearances.
Practical Law's Practice Note, Celebrity Endorsement Agreements explores the risks and rewards of these deals and outlines key considerations when drafting or reviewing the agreements, including:
- Compliance with laws governing advertising, endorsements, and testimonials.
- Preliminary considerations before entering into a celebrity endorsement agreement, like:
- appropriate due diligence;
- which state's law should govern the agreement;
- which celebrity intellectual property rights the company wants to use in its endorsement program; and
- whether the company should obtain insurance to protect its investment in the endorsement deal.
- Key clauses in endorsement agreements, including, for example:
- the grant of rights clause;
- clauses concerning the endorser's approval rights and personal appearances;
- the compensation clause;
- representations, warranties, and related covenants;
- confidentiality; and
- termination rights.
Counsel drafting or negotiating a celebrity endorsement agreement can use Practical Law's Standard Document, Celebrity Endorsement Agreement as a starting point. This long-form celebrity endorsement agreement is written from the perspective of a seller of goods seeking to obtain a celebrity's endorsement and commitment of promotional efforts to support the seller's efforts. It can also be easily modified for use by a service provider. The form document contains integrated drafting notes with important explanations and drafting tips.
Celebrity endorsement deals vary greatly in size and scope depending on the celebrity's prominence, ranging from agreements worth over $100 million to deals that simply provide the endorser with free products or services. Regardless of the size of the deal, the operative provisions of a celebrity endorsement deal are unique and should be carefully negotiated and drafted to maximize the value of the relationship and minimize risk to the company.