With the recent conclusion of New York Fashion Week, designers will be negotiating deals with stores and retailers. Typically, retailers have a strong bargaining chip when forming partnerships with designers. Designers, big or small, have almost no negotiating power if they want to enter into a vendor agreement with retailers/stores. This is applicable to others in the creative field – jewelry designers, artists, sculptors etc.
When dealing with retialers and to protect their interests, business owners should have a system in place to account for the potential risks involved in fulfilling their obligations under the agreement.
A current client, Supreme, Inc. (name changed for confidentiality purposes), that is a jewelry design house and manufacturer in New York regularly enters into vendor agreements with big retail stores like Zales and Kay Jewelers. The first time I reviewed a vendor agreement given to Supreme by a big retail store, I made substantial changes to the terms. But they were all rejected by the retailer’s counsel and my client informed me that they were going to sign the agreement anyway because it was a big account.
A few months later, the retail store terminated the agreement with Supreme, returned all of their unsold products, and refused to pay outstanding dues. The reason was that another designer had made claims to the retail store that my client had copied his jewelry designs. Even though Supreme had created their jewelry designs, they had not registered them with the Copyright Office. Eventually, Supreme had to make an out of court settlement with the designer to avoid further legal trouble.
So the next time that Supreme was entering into a similar agreement with another retail store, I came up with a plan to ensure that the business was protected from inherent risks.
One of the first things we did was to get a good commercial liability insurance plan which covered the business for potential loss, damage, theft, and infringement claims. I registered Supreme’s brand that was being sold to the retailer as a trademark to prevent someone else from using the same name. Supreme’s jewelry designs themselves had to be protected so that no one could copy them. So I obtained copyright registrations for all of the designs that were created by my client. I advised my client to maintain all sketches, rendering, drawings etc. of jewelry designs that they create.
These are just some of the precautions you can take and systems you can adopt to protect your business. Every business is different and has unique needs. There are no cookie cutter approaches to resolving legal issues that come up in business transactions.
Are you a designer or creative entrepreneur or a business owner dealing with overbearing stores or retailers? If you are entering into an agreement without having the power to negotiate the terms, make sure you have a system in place to insure your business from contingencies. We will help you determine the unique legal needs specifically for your business. Trust me, taking the time and resources to design a process for your business now will save you money and trouble later on.
We will design a systematic process for you to implement for your business. Please reach out to us and we will take the time to understand your business needs and develop a customized plan to protect your business.
Call us at 646-820-1366 or email us at firstname.lastname@example.org. I am happy to have a complimentary conversation with you on what you need so you can avoid potential pitfalls when dealing with stores, retailers, manufacturers, vendors, and clients.
Working with an attorney to lay out a plan can help avoid trouble later on in your business. Nupur Shah Law can help you if you have questions regarding your rights as a business owner.