Influencer Contract Red Flags

Episode 227 Influencer Contract Red Flags

In today’s episode I want to talk to you about influencer contracts, also known as brand collaborations.  Before signing contracts you should always have a lawyer look at it and make recommendations, but especially in the beginning.  Learning to recognize red flags is important in order to make the best decision for you now and in the future.  

In this episode we will cover:

  • Payment and business bank account.
  • Exclusivity and usage rights.
  • Defining a competing brand. 
  • Perpetuity and why it’s a no.


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The Legalpreneur Podcast is advertising/marketing material. It is not legal advice. Please consult with your attorney on these topics. Copyright Legalpreneur Inc 2022

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Episode 227: Influencer Contract Red Flags Transcript

Andrea: [00:00:03] Welcome to the Legalpreneur podcast. I’m your host, Andrea Sager, founder and CEO of Legalpreneur Inc. As a serial entrepreneur and someone that works exclusively with small business owners legally protecting their business, I’m dedicated to covering common legal issues faced by business owners, providing you with the business knowledge you need to catapult your businesses growth and showing you just how some of the world’s most elite entrepreneurs have handled these legal and business issues themselves. In true attorney fashion, the information in this episode is not legal advice. This is for informational purposes only, and you should always consult with your attorney before implementing any of the information in the show. Hello there. Welcome back to another episode of.

Andrea: [00:00:49] The Legalpreneur podcast. I’m so excited to chat in more detail about the influencer side of things. And today we’re going to deep dive, kind of a deep dive into some red flags of influencer contracts before we get into it. Got to let you know about Dream Bigger. Don’t forget we now have our two payment option can pick a payment plan for dream bigger. We want as many people to be there as possible, and so we’re making it more affordable, make it in two payments or one. It’s up to you. That option is still available until we sell out. We do still have some VIP passes. It’s probably going to be selling out in the coming weeks, so get your ticket now before they’re gone. And we also have our legal protection playbook, $37 to learn everything you didn’t know. You needed to know about the legal side of your business. You get their three part course, which is talking about planning your business, preparing and growing and scaling three part course. Plus there are some bonuses in there. One of the bonuses, which is probably the best I know, it’s the best bonus. It is a one on one call with me to chat specifics about the legal side of your business. I know everybody has a different business, so you have different needs for everything. So we’re going to have a one on one call chat specifically about your business. Now there are limited spots available because there’s only so much time in a day. So if you want to make sure you have that one on one call with me, go get it now. It’s at the Legalpreneur dot Co. It’ll be there in the show notes The Legal Protection Playbook $37 to learn everything you didn’t know. You needed to know about the legal side of your business. The re part course plus some bonus videos which comes with a one on one call with me. Literally a one on one call with me, $37. We’re going to chat about the specific legal needs of your company in this call. I can give you all the general info that you want to hear, but at the end of the day, everybody’s business is different. And so we have to make sure that you are on the right track to legally protecting your business. Influencer contracts, also known as brand collaborations.

Andrea: [00:03:09] And what I want to cover are some of the biggest red flags that I’ve seen in these influencer contracts. I’m going to talk about this from the brand side of things. There’s many things that you should be looking out for. As a general note, I always suggest getting these contracts reviewed by an attorney because I can tell you, hey, these are the biggest red flags, but there are legitimately an unlimited number of things that could be hurting you in these contracts. And also, what’s really helpful, especially when you’re just getting started on these brand collaborations, is paying an attorney to review those first few contracts with you because you’re learning these contracts. And if you pay to learn the first few, you’ll be in a much better position to negotiate these and to not have to pay an attorney down the road as you are signing more contracts. I know many, many, many influencers that have not done this and they have essentially signed their life away. They have really screwed them out of some bigger contracts because they signed a longer exclusivity deal and they should have an X, Y, Z. There’s a million things, but two big things I want to talk about. Number one is payment. And number two is exclusivity or usage rights. Again, there are a number of things that are red flags. There are many things that should be negotiated or discussed with an attorney.

Andrea: [00:04:41] But these are two of the biggest things. So like I said, if you need an attorney to review these contracts, don’t be afraid. And it doesn’t have to be very expensive at all. So if you’re just getting started working with an attorney, make sure or getting started working with brand deals, make sure that you know what you are signing. So let’s chat payment. Many brands don’t want to pay until the collaboration or the campaign is over with. It’s normal. However, you still want to try and get payment upfront as much payment upfront. Typically a good standard is half upfront and then half when the campaign is completed. That’s what I do with a lot of my bigger brands and it works out well. I get money up front. Another thing about payment is a late fee. You want to try and make sure that the brand has to pay late fee if they don’t pay on time. A lot of bigger companies, a lot of Fortune 500 companies have net 30 terms. So they pay within they say they’re going to pay within 30 terms. However, a lot of times it doesn’t happen. And so you want to make sure that there is a late fee or else you’d be waiting months and months, or you may actually have to get an attorney involved to get that payment.

Andrea: [00:06:05] Unfortunately, I’ve seen it happen many, many times. Another thing about payment is a lot of times these bigger brands will work with a third party agency that’s helping to find. The influencers and basically the agency is the go between with the influencer in the brand. But a lot of times these agencies will actually make the payment on behalf of the brand. This is the case. That’s fine. However, you need to make sure you’re going to get paid even if the brand doesn’t pay the agency. I haven’t seen this happen a whole lot where the agency doesn’t get paid, but. Crazier things have happened, I promise. Now, the other thing, it’s not necessarily payment related, but in these contracts, I’ve talked about it before, but I feel like I need to mention it here. You should have an LLC. And I mentioned it the last time I talked about influencers and influencer agreements. You should have an LLC for your company that is doing these influencer collaborations. In every single contract needs to be in the name of the LLC. You should not have your individual name. As part of the contract, you will literally sign your individual name, but it is on behalf of the LLC. The other thing is that you need a business bank account for that LLC and the brand should be paying that business bank account, typically the wire the information.

Andrea: [00:07:41] Very rarely have I seen bigger brands want you to send them an invoice like an on Stripe or something. Most of the time they just want you to send them the invoice, but make sure that payment is going to your business bank account. Now for exclusivity and usage rights. Exclusivity means the brand only wants you working with them and not a competing brand for a certain amount of time. Now, this could also mean they want you only working with them and not any other brand during a certain amount of time. That’s more rare, but most of the time it’s. The brand and not another competing brand. One thing there you got to look out for is do they define what a competing brand is? Because and if you have questions, ask. And if you have questions and they say, Oh, no, that’s fine. Make sure they put that in the contract. Let’s say you’re working with Nike and they say. Oh, Apple is not a competing brand. Make sure they put that in the contract. Whatever brand it is, make sure that you ask the specifically. They say, no, it’s not competing. Put that in the contract. The duration of time of the exclusivity. Make sure that you are getting compensated for that exclusivity. When I give my rates to brands, the rate that I give initially, most of the time they’re like, Hey, what’s your rate? And of course I try to get them to tell me the budget, but if I give them my rate, what I’m giving them is.

Andrea: [00:09:17] Exclusivity for one month if they want exclusivity for six months. My rate times six. Same thing for usage of time. They want to be able to use it for six months. Your rate times. There’s a lot of negotiating tips in here for exclusivity and usage rates. The longer they want to be able to use it, the more they should be paying you. Never, ever, ever give. Perpetual or lifetime usage rights without being compensated appropriately. I highly suggest not doing it at all. Because a lot can happen. Let’s say you’re, quote unquote, a nobody right now. They pay for. Lifetime or perpetual usage rights and then you blow up. You just screwed yourself out of a lot of money. And you probably aren’t able to work with similar brands because they have the lifetime or perpetual you should rights to that content. So if a brand wants a certain amount of exclusivity or usage rights. 100%. Make sure you’re being compensated for. And you can also always put in the contract. This and this is the initial term. For usage or exclusivity, and then you can always negotiate later to extend. I could sit here all day long and give more tips. But if you’re an influencer or brand collaborator, let me know.

Andrea: [00:10:46] Here at Legalpreneur, we’re committed to providing a supportive legal community for all business owners. I know how scary the legal stuff can be. If you found this information helpful, I would be so grateful if you could share it with a fellow business owner. And quite frankly, it doesn’t cost anything to rate, review or subscribe to the show. Your support helps me reach more listeners, which allows me to support more business owners in their entrepreneurial journey. Have any questions or comments about the show? Feel free to drop me a line on Instagram. I promise. I read all of the messages and comments, and if you want to be a guest on the show or know someone that would make a great guest, simply fill out our application form and a team member will reach out if we think it’s a good fit. I’ll see you in the next episode.

Episode 227 Influencer Contract Red Flags