How Can an Influencer Terminate a Management Contract? | Influencer Agreement
How can a social media influencer terminate a management contract? Most influencers will have either an agent, a manager, or maybe even a marketing agency working for them. And then you should have a contract with them. Sometimes, it might just not work out. The influencer is interested in terminating the agreement and then determining the implications if they terminate it. In any contract, a section states how you can terminate the agreement, normally called termination. And there are generally four common ways you can terminate a contract.
Four Common Ways for Termination of Contract
Stated on the Term of Agreement
One, your influencer management contract is going to have a term. And the term simply means how long it lasts. Somewhere between one and five years is the average amount for an influencer management contract. And then, it will state after that initial term if it automatically renews or not. Many contracts will just state that if neither party terminates the agreement, it’ll automatically renew for successive one-year terms. That just kind of goes on forever until terminated. Some contracts don’t have that language, and it’s just a fixed term, meaning it’s one year, and that’s it. And in that scenario, if your contract ended after a year, neither party renewed it, it’s over. The contract gets terminated.
The second way would be through mutual agreement. Suppose either party said this isn’t working out for whatever reason. Regardless of the contract, I’m interested in washing our hands off the situation and moving on. That would be another way you could terminate the agreement.
The third way would be with-cause. There are things that both parties must do during the term of a contract. And suppose one of those parties is breaching the contract. They’re not fulfilling the terms of the agreement. Let’s say you’re an influencer and your agency or manager stopped providing or reaching out to find deals. They’re just not doing the job stated on their contract. You would find them in breach of contract. In most well-written contracts, it’s going to state how you can provide notice of the breach. And then, typically, there would be a cure period. If the manager were in breach of contract, you would give them a letter stating the things you’re doing to breach the contract. Then, there’d be a standard cure period.
A cure period would be an amount of time that the manager or agency could fix whatever the breach is. And then the influencer could not terminate the contract with-cause. That’s the third way, with-cause termination.
And then the last and most common way is without-cause termination. Without-cause termination means either party can terminate the agreement at any time or with a certain amount of notice to the other party. In most influencer management contracts, it will be somewhere between 30 to 120 days’ notice. And what that would mean is if you’re the influencer and you were just unhappy with the agency, you would give them the, let’s say it’s 60-day notice. And then both parties would kind of work through those last 60 days. And then, at the end of that, they could move on and find new management. Now, there’s usually one kind of, I guess, a thing that sticks with the management contract.
Influencer Contract Termination Notice
And that would be if you had any sponsoring companies while working for the management company. If they were worth what you were paying them, they should have plenty of sponsoring companies for you. There will usually be a clause in the contract that states that you can’t work with that sponsoring company for a period after the contract ends. For instance, if a manager brought you a deal for a meal prep company and they said, alright, you must give one 90-second spot once a month for every YouTube video you do. Well, you couldn’t go back to that same company the day after the contract terminated and tell them, hey, I want you to pay me directly from now on. And the reason why most management companies do that is they don’t want to bring an influencer deal.
And then most management companies get around 20% commission. So, whatever they bring the influencer, they will get 20% of that. They don’t want to bring them deals, have the influencer terminate the contract, and then circumvent having to pay the management fee or commission. One year is a normal amount for that. Now, indeed, that’s negotiable. I’ve seen some that I would consider completely unreasonable are four or five years in length, and that’s not something any influencer should agree to. So, that’s how an influencer can terminate a management contract. Other topics of interest:
And then the last and the most common way is without cause termination. Without cause termination simply means either party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. In most influencer management contracts, it’s going to be somewhere between 30 to 120 days’ notice. And what that would mean is if you’re the influencer and you were just unhappy with the agency, you would give them the, let’s say it’s a 60-day notice. And then both parties would kind of work through those last 60 days. And then at the end of that, they could move on and find new management. Now, there’s usually one kind of, I guess, thing that sticks with the management contract.
Influencer Contract Termination Notice
And that would be if you had any sponsoring companies while working for the management company, and obviously, if they were worth what you were paying them, they should have plenty of sponsoring companies for you. There will usually be a clause in the contract that states, for a period after the contract ends, you can’t work with that sponsoring company. For instance, if a manager brought you a deal for a meal prep company and they said, alright, you must give one 90-second spot once a month for every YouTube video you do. Well, you couldn’t go back to that same company the day after the contract terminated and tell them, hey, I want you to pay me directly from now on. And the reason why most management companies do that is they don’t want to bring an influencer deals.
And then most management companies get around 20% commission. So, whatever they bring the influencer, they’re going to get 20% of that. They don’t want to bring them deals, have the influencer terminate the contract, and then just basically circumvent having to pay the management fee or commission. One year is kind of a standard amount for that. Now, certainly, that’s negotiable. I’ve seen some that I would consider completely unreasonable are four, or five years in length and that’s not something any influencer should agree to. So, that’s how an influencer can terminate a management contract.
What is a standard percentage of commission that a social media influencer management company will take? At some point, if you’re an influencer and you get big enough, you may want to reach out and try to find some assistance in securing some more sponsorship opportunities. And you’ll do that by finding an individual agent, an agency, a manager, or a marketing management agency. It’s all the same thing. Their role is to go out and bring the influencer deals that they might be interested in. And then for that, they will get a percentage of whatever the compensation that’s paid to the influencer for the sponsorship opportunity. Before the management company starts looking for potential deals for the influencer, they will sign an exclusive management contract.
And then that contract will dictate the terms of their relationship, so how long it lasts, how it can be terminated, what are the expectations of the influencer, what are the expectations of the management company, and then included in that would be how much, or what percentage of the compensation that the influencer receives goes as commission to the marketing agency. A standard amount would be around 20%. Now, everything is negotiable. There is certainly wiggle room to bring that down if you are an influencer, however, just like in any industry, the better someone is at their job, the more they can charge. And so, if you find a rockstar agent, and they’re certain they can bring you from this level to this level, but they’ll charge 2% more, 5% more, or whatever percentage than somebody else, well, you’re going to have to make a decision and kind of do a math equation of, alright, I could go with someone who may not have as much experience for 10% or go with someone who’s extremely experienced for 25%. Will that 15% difference be made up in all the better, higher-paying, higher volume of opportunities that a more experienced agent may bring?
I can’t answer that question. You’re going to have to make that determination on your own. But those are kind of the standard commission percentages. One thing to think about: in any kind of management contract, it’s going to state what happens after the contract ends. Let’s say the influencers, for whatever reason, decide to move on from the manager. They’ll give notice and the contract is going to state how much notice must be given, somewhere between 30 to 120 days is standard. You would still have to work with the management company for that period, depending upon the language.
But then this is the important part: there’s going to be a clause that states, if the influencer leaves, they will still owe a commission percentage to the management company for a period after the contract ends. So, for any of the sponsors that they brought to the influencer, let’s say the management company brought a meal prep company that’s interested in working with the influencer, and then they’ve been working together for a couple of years. Well, after you terminate the contract with the management agency, you don’t just automatically get to keep all of the money from that meal prep company. If they wanted to continue working with you, you’d have to pay 20% back to the old management company, usually for one year after the contract is terminated. This is simply a way for a management company to make certain that they don’t bring deals to an influencer.
Influencer Agreements After the Management Contract Ends
And then the influencer terminates the contract, takes those deals, then avoids having to pay the 20% to the management company. That’s an industry-standard restriction after a contract ends. Now, what you could negotiate is the length of the restriction, the percentage that the management company will get during that period or limiting the look back. In most contracts, it’ll state any deal that they brought to you during the relationship between the influencer and the management company. So, if it’s been a five-year relationship and they brought you a deal in year one, you haven’t worked with that brand for four years, and then they come back to you after you terminate the contract within that one-year period, theoretically, the management company would still be owed 20%. So, you want to limit that look-back period. One year is what I would consider a reasonable amount, someone might consider a longer than that.
But it’s the role of anyone who’s advising you to tell what would be advantageous to you. And I would say limit to one year, looking back, and then one year going forward, that would be considered a reasonable amount. You could also reduce the percentage that the management company receives, maybe quarterly, so every three months, go from 20 to 15 to 10 to 5. And then after that one-year period, it’s over with. So, 20% is kind of an industry-standard amount. Could be more, could be less, but that’s about the average.
Exclusive Social Media Influencer Agreement
If you are an influencer, at some point, you will likely reach out to an agency, a specific agent, a manager, or someone who’s going to facilitate the sponsorship opportunities that any influencer can get. And you will ultimately sign a contract as well, which kind of dictates the terms of the relationship between the influencer and the agency. In all those types of contracts, there’s going to be a clause that’s called exclusive management. And this is going to dictate what the influencer can do and can’t do. Exclusive management simply means that whoever you sign with is going to be the only party that facilitates deals between you and a brand. So, even if, let’s just say a brand contacted the influencer directly, if they had an exclusive management contract, it’s very likely there will be language in there that states even if we had nothing to do with this deal, if someone contacts you for opportunity, you must refer them to the agency.
And then the agency would be the ones that undertake the negotiation with the sponsor and then they would reach agreement. And then that opportunity would be presented to the influencer. Additionally, it’s the job of any manager or agency to go out and find deals for the influencer. And once again, they would be the only party that would be allowed to do that. Even if you had a friend that came to you with a deal, or even if another agent came to you with a deal, if you have an exclusive management contract with an agency or an agent, they will not be able to get compensated for whatever they bring to you. You would be required to refer them to your agency. And then once again, they would be the ones to facilitate the opportunity.
Influencers Pay After the Agreement Terminates
Now, why is this? Quite simply. If someone is managing you, they’re going to want to benefit from the commission percentage that’s been negotiated between the two parties. 20% is kind of an industry-standard amount. If someone brought to you a sponsorship opportunity and it was 2000 a month, something like that, if they got 20% of that, every month that you would get paid, the manager would receive 20% of 2000. And then that is how the compensation would occur between the two parties.
There are also clauses that likely will state if the influencer decides to terminate the management agreement, any sponsors that the influencer has had a relationship with while with the management company, they’ll still have to pay the commission percentage for a period after the contract is terminated. Most of the time, that’s one year. Let’s say you established a relationship with a meal prep company. And then you decide, you know what, I’m going to move on to a different manager, but the meal prep company still was like, hey, even though you’re not with the manager, we still want to associate with you. The contract would likely state if it’s an exclusive management contract, that even if they are no longer your manager, you still must pay them the 20% for a year after the contract terminates. That’s standard.
I mean, obviously, the biggest fear of any management company, is they’re going to bring a bunch of deals to an influencer, the influencer terminates the contract, and then they essentially avoid having to pay the 20% to the agency or manager, whoever brought them the deal. Now, where you can negotiate is certainly the amount of time after the contract ends, that kind of payback percentage would last, and then the percentage of what the agent or the manager would receive is also something that’s negotiable. Are exclusive management contracts good or bad? Well, on the most part, they’re good. Most influencers are not as savvy as a reputable marketing agency. And they have established relationships with companies, and they have a broad reach and they can generally bring you things that you either wouldn’t know how to bring to yourself or have the contacts to facilitate those deals.
Influencer Must Be Wary of Bad Managers
And then the agencies can also push their people onto the different marketing opportunities and say, hey, look, we have a client, they fit this profile. We think they’d be a great match for your brand. And for the most part, an influencer, although they could do those things themselves, it’s much quicker and kind of establishes their identity and brand faster if they’re working with a marketing firm or an agent or a manager. There will be some people who tell an influencer, you know, I can do all of these things for you. And the percentage may be even more than 20%. Always look to see what’s the track record of this person, who else have they represented, and even contact the people that they’ve represented to determine if they’ve done a good job.
Usually, people who are bad or burn influencers can get a bad reputation quickly, and that spreads amongst the influencers and you can kind of figure out, alright, this person is just trying to take advantage of the influencers. But always do your due diligence when you are about to sign an exclusive management contract because there will be repercussions after the contract ends.
Breaking a Contract
Can you break an influencer management contract? One thing that I find kind of gets confused is when someone considers breaking a contract, meaning, breaching it, or just simply terminating a contract, and let’s go over the difference between the two. If you’ve signed a management contract with an agency or a manager, there will be clause in that contract that states how the influencer can terminate the agreement, meaning, end it. And for the most part, there’s four ways that you can terminate a contract. If it’s for a fixed period and it doesn’t renew, let’s just say it’s a year, either party wants to renew, the contract ends, it’s terminated and that’s it.
You could terminate it by mutual agreement. At any point, even if there are clauses in the contract that state a certain amount of notice that must be given, you can just say, you know what, it’s not working out. Let’s just move on. If both parties agree, then you can move on. The third way is for cause termination, meaning, one party has breached the contract. Let’s just say you’re an influencer, your management company continues to pay you slowly, or they’re not paying you the correct amount, you’d send them written notice they’re in breach of a contract. Then normally, they’d have time to fix that breach, called a cure. And then if they haven’t fixed the breach at the end of that cure period, you could terminate the agreement immediately.
And then the last way to terminate a contract and the most common way is without cause termination. And that just means either party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. Somewhere between 30 to 120 days is kind of a standard amount of notice in a management contract. If you are the influencer, the shorter amount of time, the better. I mean, if you decided to end your relationship with a manager, you don’t want to work with them anymore, the longer that you’re forced to work with them, or kind of sitting there waiting to find a new manager is not great. So, you want to keep that as short as possible. There are a couple of things that can also happen after you terminate the contract. Once again, breaking a contract also just means terminating the agreement. There will usually be a provision in almost any exclusive management contract that states the influencer will have to pay whatever the agreed-upon percentage of commission after the contract is terminated for a period, usually, one year with any brand that the management company has brought the influencer. Let’s just say the influencers brought a deal with the skincare company, from the management company, they agreed to it, they’ve been working with them for years.
Influencer Contracts Must Contain Notice
Well, even if you terminate the contract with the management company, that doesn’t mean you have to stop paying them the percentage with that skincare brand. You would have to continue paying, let’s just say it’s 20% for the entire year after the contract ends, because they brought you that deal. I mean, the management company, the biggest fear of them is they bring an influencer deal, it’s a great deal. And then the influencer terminates the agreement, leaves, and then doesn’t have to pay any commission to the management company. That’s standard as well. Now, what happens if you sign a management agreement with a company and then you don’t want to go forward with it? That’s where I would consider breaking the management contract. Well, you still have to follow through with the notice provision.
So, if you sign the agreement, and you don’t want to move forward, you still have to give them notice. Now, obviously, you’re not forced to accept any sponsorship opportunities by somebody. If they were to say, hey, we have all these deals that we want to bring you. But if you’ve already given them notice that you’re going to leave, you don’t have to take them. But there may be language in there that states you can’t contract with any other management company until after that notice period is ended and the contract is officially terminated. That’s what I would think of breaking a contract. I do a lot of work with physicians and so physicians all the time will sign a contract and decide not to go through with the job. And then there’s a whole discussion of, alright, well, what are the repercussions here?
It’s a little simpler for an influencer because for the most part, not a lot of time, money, or resources have been expended if they’ve signed the agreement but haven’t even started working yet. Whereas with other professions, sometimes there’s licensure, you have to go through credentialing and insurance and all that kind of stuff. Anyway, that’s how you would break an influencer management contract.
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