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October 29th, 2022
How Brands Split With Celebrity Partners
Advertising Partner Christopher R. Chase is quoted in the article, “How Brands Split With Celebrity Partners” published by The Wall Street Journal. The article discusses the sometimes complicated process of a company separating from a famous business partner in light of Adidas ending its partnership with Kanye West after his anti-Semitic comments. Christopher is quoted saying, “Marketers that have made their decision can often quietly terminate a contract if it is relatively basic, such as those requiring a celebrity to appear at an event or letting brands use someone’s name and likeness for promotional purposes. But cases in which celebrities help design products that bear their names and may even own some equity in the company are more difficult to resolve.” Christopher adds, “If the talent retains some ownership, then you have to stop making the product entirely instead of just taking their name off. This is literally shutting down the factory to some extent.”
Brands rely on morals clauses, which give them the right to terminate a contract when a spokesperson behaves in ways that could be perceived as damaging to the client’s reputation. “The offensive behaviors may be specific to the company in question; alcohol brands commonly include contractual clauses forbidding D.U.I. arrests or drunk and disorderly behavior among their representatives,” said Christopher. He adds, “At the same time, vaguely worded morals clauses can lead to costly and potentially damaging litigation as lawyers argue over whether a spokesperson’s behavior constitutes a violation. While a brand may wish to terminate a contract if a spokesperson’s behavior isn’t to its liking, the celebrity’s legal team often argues that the language should apply only to much more specific violations, such as an arrest.”
Christopher says, “Brands may also try to hedge against potential monetary losses with liquidated damages clauses, which require the spokesperson to repay a certain amount to the company as compensation for failing to fulfill the contract. But these sorts of clauses aren’t particularly common, because language defining the sorts of offenses that justify such action must be very specific to be considered seriously by the courts. Brands should also carefully gauge the risk when they consider signing a spokesperson with a history of erratic or offensive behavior, especially if the person will play an outsize role in their marketing efforts. And that is not just because such behavior could occur again. A brand might struggle to justify canceling a contract over new behavior when a celebrity’s legal team can point to similar instances that predate the deal. He concludes by saying, “Talent lawyers have said, ‘Listen, you’re hiring her because she’s a little out there, so I’m not going to let you terminate because she does something that’s a little out there.’”
Read the full article here.
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