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Fame and misfortune

Written by Adam Pescod on Wednesday, 31 July 2013. Posted in Commercial law, Legal

Hooking up with a celebrity could be the catalyst your business needs. But endorsement comes with its own risks

Fame and misfortune

Persuading a celebrity to endorse your brand is a surefire way to attract the attention of the press and punters alike. That said, the value of celebrities as brand builders is counterbalanced by their often unpredictable behaviour, which can pose a variety of risks to your business. Therefore it makes sense to treat a potential collaboration with a high-profile star with a certain degree of care and due diligence, just in case they act in a way that threatens the reputation of themselves, and more importantly your brand.

Indeed, Adidas would not have been able to wash its hands of the sprinters who tested positive for banned substances if the contract between both parties wasn’t sufficiently watertight. And the same applies to the disgraced American cyclist Lance Armstrong. The brands and charities that used his supposedly good name for promotional purposes would be in a far stickier situation now if – due to a sloppily written contract – they still found themselves tied to the Lance Armstrong name for the foreseeable future.

Naturally, most celebrity collaborations are struck in good faith – from both parties – and so it makes sense to ensure that any contract signed covers a fairly lengthy timeframe, in order for your brand to get as much value out of the deal as possible. 

“Obviously, advertising campaigns are expensive, so if you set up a campaign, you want to make sure that you can run it for long enough that you get the full benefit of it,” comments Kathryn Rogers, associate at law firm Cripps Harries Hall. “You want to have a fixed term written into that contract, which ensures you are getting the value.”

Nevertheless, any business owner who cherishes their brand above all else will ensure that grounds for termination are clearly laid out in the contract, regardless of how well the celebrity is perceived by the general public. “You want to make sure that you can actually terminate the contract during that fixed term if anything happens with the celebrity, which could damage either their reputation or the reputation of your brand,” explains Rogers.

Evidently, depending on the nature of a business, certain types of celebrity behaviour would be less likely to cause harm to your brand than others. “A speeding fine might be okay unless your brand represents safe driving, in which case speeding wouldn’t be okay,” Rogers adds. “It is a case of tailoring the contract to your brand and not just using an off-the-shelf template endorsement contract.”

As is the law though, a celebrity has the right to challenge any attempts to terminate the contract should a situation arise where the brand deems it the only option. “You can put in a clause that says you are able to terminate the contract if the celebrity does anything that you feel could cause harm or damage to your brand,” says Rogers. “However, there is a risk that the celebrity wouldn’t accept that, and they would then want you to give more prime examples of ‘in which circumstances you could terminate’.”

And the same ultimately applies to any efforts to recover financial losses. “You would want to have provisions to enable you to effectively claim your money back, not only the amount you have paid for the endorsement, but also the losses you have suffered as a result,” Rogers explains. “And that is going to be an issue of negotiating it with the celebrity, because obviously they are not going to want to financially expose themselves.”

Of course, a celebrity will reasonably expect a similar level of protection in case your own brand becomes embroiled in controversy. Rogers adds: “A celebrity is also a brand so if, for example, he or she was linked with Tesco when the horsemeat scandal was going on, they may well think that is not something they want to associated with, and so at that point would want to be able to withdraw the use of their name from the branding.”  

Another recent news story that has exposed the complex relationship between real business and show business involves pop star Rihanna and clothes retailer Topshop. The former is pursuing a reported £3m from Topshop after it used her image on a T-shirt. Rihanna believes that it has breached her image and personality rights but Rogers explains that no such rights currently exist in the UK, as they do in the USA. Therefore, she says, the only grounds upon which Rihanna could have a case against Topshop would be for ‘passing off’.

“‘Passing off’ is a way to protect a person’s name or image if the use of it attracts goodwill and, if by using it, the brand is effectively making out that the celebrity is endorsing the brand,” Rogers explains. And, while admitting that Rihanna would probably have no issue proving she has goodwill in her own brand – she already has a merchandising deal with River Island – Rogers says that the endorsement angle provides the biggest challenge from a legal perspective. “I don’t think there is a thought among the general public that, just because there is an image on a T-shirt, that means the person who is in the picture has said, ‘Yes, you can use it,’” she comments.

Suffice to say, should Rihanna win on such grounds, it seems it could have a significant bearing on the British retail sector. “It is really going to come down to whether the judge in the case feels they are prepared to accept this personality right concept in the UK,” says Rogers. “It would be quite a big change because it is not unusual for images to be used on T-shirts without there being a celebrity endorsement contract in place.”

Taking into account the additional copyright implications of using a celebrity photo to help boost your brand, it really does pay to be on guard when it comes to dealing with the rich and famous. 

About the Author

Adam Pescod

Adam Pescod

EB's former editor, Pescod was tasked with ensuring these hallowed pages are rich with excellent, engaging and error-free stories, all written with the entrepreneur in mind. Pescod previously plied his trade penning pieces about pubs and pints. He is also a sucker for alliteration. 

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