Tahir's Tips: Legal Tips for Fashion Collaborations
Collaborations between fashion designers, high street and chain retailers have become increasingly popular in recent years. Notable examples include Maison Martin Margiela at H&M, Jenny Packham for Debenhams, Alice Temperley at John Lewis and Gharani Strok with TK Maxx.
Armed with the right designer collaboration, retailers can benefit from an increase in media and public attention, as well as the fashion credibility that helps attract a new slew of customers to the shop. For the designers the advantages of collaborating with a high street chain include the obvious financial benefits as well as the ability to reach out to a new customer demographic through a larger market. The designer can get the benefit of the wider reach of the retail brand collaboration and tap into a new price point aimed at consumers who are less likely to be able to afford items by high-end designers at their normal price.
However, designers should always be mindful of control over quality, prices and flooding the market with their brand, as low prices, poor quality and having your brand appearing ubiquitously in ‘stack ‘em high, sell ‘em low’ type establishments can in the long run cause huge damage to the designer’s brand.
This week, I have set out my top tips that designers should bear in mind before they put pen to paper on any collaboration agreement with a high street retailer:
1. The agreement should clearly state exactly what is being licensed to the retailer. If you are a designer with a variety of brands you may not want the retailer to have a license over all of them. Also, the retailer is most likely going to want an exclusive license over your brand. You should consider this carefully as it means you will be unable to license the brand to another retailer while the agreement is in force. A diffusion line or sub-brand is often the solution as it builds a level of distinction between the main brand and the sub-brand.
2. The agreement should clearly define what products are being licensed. If you are entering into an agreement with a large department store they may want to use your brand over a wider range of products than just clothes. I have seen the list requested range from clothes, jewellery, eyewear and household goods to name a few. The designer should think hard about the list of licensed products he or she is prepared to license to a retail store, particularly if it is an exclusive license. The key thought to bear in mind is considering whether it is more sensible to license different products to different specialist stores rather than being tied down to just one.
3. The designer should maintain as much control as possible over how the retailer uses the designer’s brand. The extent that you will be able to achieve this will vary depending on your negotiating strength but it is important that you have control over things such as what logos or marks can be affixed to the products and how your marks are presented to the public. Without such control the retailer may cause irreparable damage to the reputation of your brand. The agreement should contain provisions stating that the retailer will send you samples of products before they hit the shelves and that you may reject them if they do not meet your standards before they are sold in any stores.
4. Depending on the nature of your brand it may also be important to maintain control over such things as; where the products are manufactured, how many products are manufactured, where your products are sold, the minimum price at which products can be sold at and how the products are marketed and advertised.
5. The way in which the retailer pays you should be clearly set out. Often designers receive a royalty (i.e. a percentage of the sales or profits made by the retailer when selling your products). What percentage this is will be a hotly negotiated point and will depend on the bargaining power of you and the retailer. It is not just the percentage of the royalty that is important but also on what royalty base price it is calculated on. Regardless of power it is important that the agreement contains provisions that allow you to audit and inspect the books and records of the retailer in relation to your products. This will enable you to check that you are being paid correctly and if not, be paid any shortfall. Often when an audit is carried out and a shortfall is discovered it is not a case of the retailer being dishonest but more a case of errors in the royalty accounting happening somewhere along the agreement, invoicing, payment or processing chain. Having the ability to check that you are being paid properly can therefore be very valuable.
6. The agreement should clearly state what will happen to the products the retailer has manufactured that have not been sold when the agreement comes to an end. It is standard practice for there to be a ‘sell off’ period whereby the retailer can continue to sell the products for a short period of time, following which there should be an agreement allowing for the remaining stock to be sent to the designer either for free or at a discounted price or cost price.
Designers may be wooed by the financial benefits of selling large amounts of stock (albeit at a cut down price) but need to be mindful of getting the right balance between price, quality, ease of access and long term brand positioning. If the collaboration and accompanying agreement is handled correctly then this should be a successful marriage that respects the designers quality and standard controls while allowing the retailer to do what it needs to do to maximise sales to its target audience.
For more information on Industry member, Tahir visit his personal partner page on the Sheridans website. To contact him directly, visit The Industry Directory, email [email protected] or telephone 020 7079 0103.
