Advertising Law Tool Kit - Tenth Edition | 2022

70 / Venable Compensation • Flat fee? Equity interest? Royalty? Combination? If talent is paid a royalty, is there an advance or minimum guarantee? Are any upfront amounts recoupable against the royalty? Is the royalty limited to certain types of sales (e.g., direct-to-consumer only)? • If there is a term extension option (for the service term and/or usage term), does the agreement include a term extension fee? • If there is a possibility of needing additional service days from the talent, then add a day, half-day, or hourly rate for additional time. • If all or some of the services fall under SAG/AFTRA jurisdiction (e.g., TV, radio, digital video), then add an allocation provision. This is generally at least 50% for union services if TV is involved, but the allocation could be lower for SAG/AFTRA for multi-service contracts. • Include royalty definitions, if applicable, such as “gross revenue/sales” and “net revenues/sales.” • Is there a royalty tail (i.e., royalty for a period of time after the term ends)? Exclusivity • Define the exclusive industry category and the scope of exclusive services. • Exclusivity can either apply only during the service/usage term or be included in a tail of some period following term expiration. Termination • Include a standard for-cause termination that includes breach, violation of morals clause, death or disability, and force majeure. • If talent has public appeal for reasons other than talent’s celebrity status, include termination rights linked to talent’s continued performance of the thing for which talent is famous or with which the endorsement is linked. For example, if talent is a musician, talent must continue to make or perform music, or if talent is a professional athlete, talent must continue to play the sport at a professional level. • Address termination for convenience (e.g., due to change in campaign strategy). This typically requires a “kill fee” or “early termination fee.” • What is the effect of early termination on compensation and usage rights? Spokesperson Agreements