On the March 23, 2011 Ask Tara Reed call, I had Maria Brophy on the line with me asking the questions. It was awesome because she also gave her insights about the questions so people really got a two-for-one deal. The added bonus came when we were talking about contracts – or lack there of – and she said, “Oh I do a deal memo.”
My ears perked up as did many of the listeners, “Deal Memo? What’s That?”
Maria explained it to us and agreed to do a blog post to share with everyone. Thanks so much Maria – you rock!
– Tara Reed
Guest post by Maria Brophy, Art Licensing and Marketing expert. Maria writes a blog that helps creative entrepreneurs design the lifestyle of their dreams at www.MariaBrophy.com.
Sometimes the most difficult thing about licensing art is not the actual CREATING of the ART (that’s usually the easy part for artists), but it’s creating of the DEAL itself.
Some artists have a hard time articulating what they want from a licensee. And often, in the beginning of their art licensing career, they aren’t even sure what it is that they want!
But please, rest assured that over time, each license deal you put together will be easier than the last. And there’s an easy-to-use tool called The DEAL MEMO that can help you feel more comfortable in putting together a deal.
Before creating your Deal Memo, you want to gather information by asking the manufacturer questions such as:
- What specific product categories they intend to manufacture using your art (i.e. coffee mugs, blankets, etc.);
- The territory in which they are selling (i.e. North America, Europe, Canada, etc.);
- The distribution channels in which they intend to sell the products (i.e. department stores, mass market, etc.);
- How many units they intent to roll out initially (just an idea – you won’t hold them to it).
With that information, you can then determine how you want the deal to be structured with regards to royalties, term, advances, etc., and tie up all the little details in your mind.
Tell the licensee that you’ll be sending them a deal memo for their review. (This will come off as extremely professional and you’ll gain instant respect!)
Then put together a one-page deal memo (sample at the bottom of this post), outlining the key points of your offer, and e-mail it to the licensee with a note that says: “If you are agreeable to the attached deal memo, I will draw up the licensing agreement and send it to you right away. If you have any questions, please let me know.” (This also works if they are providing the contract/agreement – just change the wording to reflect that.)
What I like about the deal memo is that by putting something in writing, you can’t misunderstand each other. It will help to quickly determine if you and your client are on the same page with regards to the deal. It efficiently cuts through all the gunk of negotiation and gets right to the point.
Use of a proper deal memo also sends a positive message to your client that you are a professional and that you are experienced (even if you’re not).
The most important points outlined on a deal memo are:
- A date that the offer expires (I use 30 days) – Always give an expiration date so they don’t come back a year later expecting you to honor an old offer.
- Specifics on the product, territory and term (always be very specific, not vague)
- Royalty and Advance requirements
- Copyright notice (state that the artist retains copyright)
- Samples/Approvals required
A deal memo is not a contract or a legal agreement. It is simply a tool that you can use to provide an outline of your deal offer and the particular points that you want to agree on.
Below is a sample Deal Memo that we’ve used in the past (the name has been changed to respect the company). I hope this is helpful to you, and please, forward onto your friends that may find this useful, too.
Here’s to your success! Maria Brophy
______________________________________________________________________________
Son of the Sea, Inc.,
Master Licensor of Drew Brophy Properties
P.O. Box 836, San Clemente, CA 92674 949-366-5236
DREW BROPHY PROPERTIES DEAL MEMO
Licensee: Sir Raleigh Watch Company, LLC Address: One Main Street, New York, NY
DATE: March 10, 2011 Offer Expires: 30 Days from date of Deal Memo
Licensed Property: 24 Images provided for the purposes of the agreement
Non-Exclusive: Yes Term: Two Years Territory: North America and its territories
Distribution Outlets: Online, specialty and sporting goods stores
Licensed Articles: Marine water-proof watches, individually packaged
Royalty Rate: 8% Gross Revenues payable Quarterly Advance of Royalty: $6,000 Due at signing
Samples/Licensor Sales: Three samples of each Licensed Article to be provided to Licensor at no cost. Additional Licensed Articles available for purchase by Licensor at lowest distributor pricing. All product samples, quality and packaging must be approved by Licensor prior to taking to market.
Copyright Notices: © 2011 Drew Brophy must be printed on all products (where applicable), marketing and print material. Drew Brophy signature and logo will be clearly legible on articles, hang tags and/or labels.
Notwithstanding the parties execution of this deal memo, neither party shall have any binding contractual obligations to the other with respect to the matters referred to herein, and no agreement shall be deemed to exist, unless and until a definitive license agreement has been mutually executed between the parties in form and substance satisfactory to the officers of the parties authorized to execute such agreements. As Agreed Upon:
Licensor: ___________________________ Date:____________________
Licensee: ___________________________ Date:___________________
Upon agreement, Son of the Sea, Inc. will provide a formal License Agreement.
This is so great, Maria! Thanks for the post, and for sharing the specific verbiage of the memo. As a graphic designer, I often put together proposals for projects that the client must sign (and pay a deposit) before I begin. This almost seems like a version of a proposal for the licensing world, which makes great sense!
Thanks, you two; the Tara and Maria Show was fun to listen to, and so informative!
This is an awesome post … I am just now starting to look into the idea of art licensing but as a former web / graphic designer … I am glad to discover this is standard professional practice! And it will be so helpful to know what to include in one! Thank you so much!
Tara and Maria, thanks for sharing this information. I had never heard of a deal memo before, and I think it’s a great idea. I enjoyed the call the other night.
Thank you for the comments, Alex and Liz! And thanks, Tara, for giving me a platform to share this with your loyal readers.
I hope this tool helps artists to clarify, in their own minds first, what they want to offer or accept in a deal with a manufacturer!
Love this! Helps cut down on lawyer fees/time too to get it all ironed out in advance of the contract
Maria and Tara,
Thanks so much! This really removes a lot of the fear. I like that it helps us ask for what we really want, in stead of waiting to see what they offer. It puts more control in the hand of the artist and you are so right…. we often don’t really know and this is a great way to sort it all out.
I appreciate you so much! I signed up for, but missed the call, due to a last minute conflict.
Thank you Maria and Tara! The recorded version of the telecall is on my ipod. There has been so much to learn regarding licensing and these calls help bring the dream of licensing closer to reality. This one was especially helpful because you both had interesting perspectives to share when answering the questions.
Thanks for sharing the Deal Memo format and your licensing expertise.
Thank you Tara and Maria for all the info. in your last ASK CALL and for sharing yet another licensing tool! I love the idea of a “Deal Memo” rather than the same info. in an email. It’s a much more professional representation!
With appreciation,
Sue Duda
Wow! So helpful! Thank you, Maria, for sharing your experience and insight with us. This is an excellent tool and I hope to have the opportunity to utilize it soon!!
Best regards,
Beverly
Got a simple question. Can people sue on DEAL MEMO?
Dear Tashi,
That’s a great question! My attorney once said that when we make an offer (by Deal Memo or by sending a Licensing Agreement, even if it hasn’t been signed yet), that we are legally obligated to the terms. That’s why I always put a short expiration time limit on it (30 or 60 days) for them to accept.
For greater detail on Art Licensing Contracts, consider getting our How to Understand Art Licensing Contracts book. It’s a wealth of info on these topics! (See the link below)
The Deal memo is very helpful. Thanx for the great tips!