The last thing you want to discuss on a Friday is a contract, clutch your pearls! But, business is an everyday occurrence, so nevermind that it’s Friday, read and learn. Here are just a few contracts that are relevant to your fashion business, that you may or may not have known about:
-The Trademark License Agreement, being able to reach the stage where you are licensing your trademark is a great accomplishment. Some things to keep in mind, this is not an exhaustive list:
*The financial soundness of the licensee
*Ability of the licensee to pay royalties/types of royalties
*Experience the licensee has in product category
*Will License be Exclusive or Non-Exclusive
*Term is typically three years six months
*Distribution Channels that will be used
*Due Diligence (thorough research on the parties involved) is a must on the parts of both licensee and licensor
-License Agency Agreement, agents can assist both licensor and licensee in obtaining licenses. These agreements can be exclusive, meaning agent is paid whether or not it brought the deal to the client, or non-exclusive. Agents can be paid a percentage of royalties by the brand owner or a percentage of net sales by the licensee.
-Factoring Agreement, financing your business with a factor. This is where you obtain financing based on your accounts receivables. The factor advances you a percentage of the recievable. The fees and expenses required by factors should be reasonable. Resist imposition of minimum factoring fees on a monthly basis if for example the nature of your business is seasonal. That means less rwcwivable if you are a seasonal business and you don’t want to be on the hook for such monthly fees. Small businesses should focus on an annual minimum fee. Entering into a one year term under this agreement may suit your business.
This concludes this episode of Fashion Friday Business Tips! Don’t want you to fall asleep, next week we will take on a new topic. If you have a question, please don’t hesitate to ask!
Cheers to the weekend and to your successful business!
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