It is an ongoing newsworthy story when scandals relating to stars, such as Paula Deen, Lance Armstrong, and
Tiger Woods, who make high amounts of money in endorsement deals simply by being
public figures, are ripped away from their endorsement deals in the blink of an
eye. Many of you may wonder how it is so easy for product placement companies to
legally bid "adieu" to endorsement deals with their celebrities.
Endorsement agreements
between companies (such as Walmart, Macy's, Verizon, and Nike) and
celebrities can be high profit, high volume business ventures. These companies rely on the persona and high
profile image of their endorsers to positively attract attention to their products. This could be either endorsements of a
particular product, say, Taylor Swift for Diet Coke, or for an entire company such
as Adam Levine for Proactiv.
One of the most
important tools for any company to have is the ability to protect their brands
and intellectual property. In order to
achieve this protection, companies include very specific clauses in any endorsement
contract which are intended to give companies the ability to terminate the
endorsement and even possibly recoup payments previously rendered to
the celebrities. Morality clauses are
deeply negotiated because, on one hand, the celebrity wants as much specificity as possible when
having their behavior judged while companies want to judge and interpret the contract in a fluid, sole
discretion manner. A well drafted morals
clause clearly delineates the standards of conduct and what the repercussions will
be if the endorser's actions are out of line.
Clear trigger points and adherence to the company's code of conduct
and/or company policy is a good starting point to drafting the morals clause
in an endorsement contract.
What happens if a
company feels that their celebrity endorser breached the morality clause? A company's course of action not only affects
its current business but its societal position. After evaluating the
violations that took place, it is up to the company to decipher termination vs. reaction from the public.
It could be as small as doing nothing and letting the incident die off
to as much as making a public statement against the celebrity and terminate the
agreement.
An entertainment
attorney can play a crucial part in the negotiation and administration of a deal. The deal making process needs to be understood
by knowing what the company needs from an endorser and having a practical handle
on what a celebrity can deliver.
Marketing is an integral piece of both a celebrity and company's
success. It is in the interests of both
parties to maximize their brands and add value in order to gain a high presence in public commerce. Neither party wishes to have the morality
clause triggered, but if it does, the clause should be specific, clear and
encompass the company's best business practices and protect the celebrity's
persona.
Tifanie Jodeh grants
column recipients permission to copy and distribute this column and distribute
it free of charge, provided that copies are distributed for educational and
non-profit use, no changes or revisions are made, all copies clearly attribute
the article to its author and include its copyright notice.
DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.
DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.
