8 Important Questions to Ask a Small Business Before You Sign an Art Licensing Contract
Picture this:
The owner of a kids' apparel company you always wanted to work with gets in touch with you. They found you on social media (or perhaps you reached out to them before). They love a design you created and want to license it for their product.
You just got that warm, fuzzy feeling inside, am I right? You want to jump up in joy, pop a bottle of champagne, and do a little, happy jig.
But hold on! Do not jump the gun and say yes to the project yet.
Before you agree to whatever terms the company puts forth, you need to ask them some vital questions. Getting answers to these questions will help you quote an appropriate fee.
Here are eight questions you need to ask before you sign an agreement:
1. Do you want to license one design or the entire collection?
The price of an entire collection will be higher than that of one design. Your rates would also depend on the complexity of the design. Before quoting your rates, ask your potential client this essential question.
2. Do you want exclusive rights to the design?
As surface designers, we often hear terms like 'exclusive' and 'non-exclusive'. These terms can often have slightly different meanings, depending on the company. In most instances, when a company gets exclusive rights to a design, you cannot use it for a similar industry. For example, if you license your design exclusively to the kids' apparel company in question, you cannot license the same design to another apparel company. Ask for higher prices in this case because you will not be able to pitch the design to companies in the same industry for the entire duration mentioned in the contract.
Most small businesses will opt for a non-exclusive license. In theory, this means you can license the same design to a competitor. But in practice, most companies will prevent you from licensing the design to a company selling a similar product. Here's how it might look in action: If you grant a non-exclusive license to the kids' clothing company, you can license the same design to a different apparel company as long as it isn't for the children's market.
3. What is the duration of the licensing agreement?
Most licenses run for a period of one or two years. If the small business wants to license the design for more than two years, make sure you quote a higher rate.
4. What territories do you want to sell the products in?
Again, this is crucial information, which you need to include in your contract. If your client wants to distribute their products globally, you will quote a higher price than if they sell their products only in the US market. The wider the territory, the higher your prices.
5. What products do you want to use the design for?
This is important if you want to determine the 'exclusive factor' of your design. Mention the products in your agreement, so you know which industries you are free to license the design to, during the contract period.
6. Will you be providing a sample?
A lot of companies provide product samples. It isn't a rule to send samples. But if they do, you're allowed to do a happy dance! Product samples are proof of your hard work and an opportunity to flaunt some gorgeous art. They're also the most precious keepsake that you could ask for.
7. May I mention you as a client on my website and social media?
Most businesses will be more than pleased to oblige. It's always fun to mention your clients on social media as you show off product samples or give your followers a behind-the-scenes sneak peek. If the companies write you a raving testimonial, that could be the cherry on the top!
8. Do you have a contract, or would you like me to send you one?
The small businesses that have licensed my work have asked me to draft a contract. If you are in a similar situation, you can always refer to the Graphic Artists Guild Handbook: Pricing & Ethical Guidelines or find a plug-and-play template online that suits your need.
These eight questions are what I consider the most important points you should clarify with a potential client before signing an art licensing agreement.