Is There a Non-Compete in an Influencer Management Contract? | Influencer Non Compete Agreements
Do exclusive management contracts have non-competes? In most contracts for social media influencers, there can be what’s called restrictive covenants, and these are things that an influencer cannot do after the contract ends. Let’s just take a physician, for example. They could have a non-competition clause that would then say they can’t work as a doctor within 10 miles of their office for one year. Well, obviously as an influencer, that doesn’t make any sense as you are all over the place. And you’re not in one specific location. What management companies do, and this would be an agency, an individual agent, an individual manager, or anyone who has an exclusive contract with the influencer to go out and find deals and negotiate with them.
Social Media Influencers Must Pay After Termination
There will be a clause in there that states the influencer cannot contract with any sponsor that they did business with, while with the management company for a period. And I’ll just give an example. Let’s say a skin company reaches out to the influencer and states, we’d like to have relationship, and then they go through your management company, and they negotiate the deal. Then the management company comes back to you and says, are you interested? You say, great. You work with them for two years. Well, let’s say at some point, you don’t want to use the same management company anymore and you decide to terminate the agreement, so the agreement ends. Well, there’s going to be a clause in there that states you won’t be able to work with that skin company for, usually, one year.
Or if you decide to continue to work with that company, you’ll still have to pay your old management company whatever the commission percentage was during the term of the agreement. Most of the time, that commission percentage is going to be 20% or at least around 20%. So, even after you terminate the contract, and even after that management company is no longer managing you, you still have to pay that commission fee to them if you decide to stay with the same brands for usually, as I said before, a year after the contract is terminated. Now, what can you negotiate? Two things: one, you can negotiate how long that restrictive period lasts. As I said, if it’s one year, maybe knock it down to six months or three months or whatever, or over time, you can try to get that commission percentage reduced. Other topics of interest include:
- When Does a Manager No Longer Have Access to Influencer Data?
- What is a Standard Influencer Management Commission?
For instance, let’s say for the first three months, it’s 20, for the second three months, it’s 15, and 10 and 5, some way of decreasing the amount of money that you have to pay to your old management company. Now, the reason why the management company does this is they don’t want to set up a bunch of deals for an influencer and then have the influencer bolt. And then they take the brands that they got from the management company and the management company gets no compensation for that. I mean, that’s honestly not fair. But how long after the contract ends the influencer must pay back the management company? Well, that needs to be fair as well. And is one year fair? I don’t know, it’s debatable. Another thing you could think about is the language may say any company that you’ve worked with while with the management company.
So, maybe you’ve worked with them for five years and you terminate the agreement. You haven’t worked with the brand for four years, and then the brand comes back to you and says, hey, do you want to create a relationship again? Well, unless you limit the language in that contract, you may have to pay the management company for an entire year for a brand you haven’t worked with in a very long time. What you want to do is have what’s called a look-back period. And so, if the contract states you’re going to have to pay for a year for any brand that we’ve brought to you, you want to limit it to a period, usually it would say in the last 12 months. At least that’s what I would do. That way, if you work for a brand four years ago, they can’t come back to you and say, I know you haven’t worked for them for a very long time, but we made the introduction.
You worked with them while you had a relationship with the management company, so you still owe us 20%. If you can limit that to a year, all those brands that you worked with in the past could come back, and then you wouldn’t have to pay the management fee to your old manager, which is annoying for most influencers.
Terminating an Influencer Agreements
How can an influencer terminate a management contract? Most influencers will have either an agent or a manager or maybe even a marketing agency working for them. And then you should have a contract with them and there are times where it might just not work out and the influencer is interested in terminating the agreement and then determining what the implications are if they terminate the agreement. In any kind of contract, there’s going to be a section that states how you can terminate the agreement, normally called termination. And there are generally four common ways you can terminate a contract. One, your influencer management contract is going to have a term.
And the term just simply means how long it lasts. Somewhere between one all the way up to five years is kind of a normal amount for an influencer management contract. And then it will state after that initial term if it automatically renews or not. Many contracts, let’s just say it’s a one-year term, will just state if neither party terminates the agreement, it’ll just automatically renew for successive one-year terms that just kind of go on forever until terminated. There are some contracts that 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 done. The contract is terminated. The second way would be through mutual agreement. If either party, for whatever reason just said, you know what, this isn’t working out, regardless of what the contract says, I’m just interested in kind of washing our hands of the situation, 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 if one of those parties is breaching the contract, so they’re not kind of fulfilling the terms of the agreement, let’s say you’re an influencer and your agency or manager simply stopped providing you or reaching out to find you deals or something, and they’re just not doing the job that they were contracted to do, well, you would find them in a breach of contract. In most well-written contracts, it’s going to state how you can provide notice of the breach. And then normally, there would be what’s called a cure period. If the manager was in breach of contract, you would give them a letter that states, here are the things you’re doing to breach the contract, and then there’d be cure period normally. And a cure period would be basically 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.
Contract Termination Language in an Influencer Marketing Agency Contract
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.
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.
Influencer Contract Terms
Parties will clearly discuss the kind of content the influencer will produce for the brand ahead of time. Both sides of this transaction need to get together to determine what type of content they will put out and how that content will correspond with the brand’s overall strategy. The influencer management contract will contain a few terms within this aspect of the contract that includes:
- Exclusive Management Clause – A social media influencer manager will likely want to have a clause written into the contract that they offer their talent that dictates that they are to be the sole manager of that talent. This is done to ensure the content put out by the talent follows what both parties have previously agreed to.
- Length of Access to Data – Managers need access to influencer data to decide who to hire and how long. However, that data connection needs to be revoked after a while when the performer no longer works directly with the manager they originally signed up with.
- Non-Compete Clause – There is likely to be a clause within the contract that requires the influencer not to produce endorsed content for any other brand that directly competes with the brand currently signing them up.
- Commission – The manager will likely put in information about how much commission they expect to get for helping the talent find endorsement deals in the first place.
- Termination – There should be specific information about how an influencer can terminate the contract they have set up. This will make it easier for them to end an agreement not actively serving their purposes.
These are just a few aspects of influencer management contract terms. There are many more aspects of these contracts to consider as well.
Essential Requirements for Social Media Influencer
It is ideal to have all of the essential elements of an influencer management contract hammered out in specific detail within that contract. Failure to do so can mean that important aspects of the relationship get left out. Companies will want to make sure it is clear what their goals are for the relationship that they develop with an influencer that they pay to market their posts. Here are some examples of things that most companies want to ensure are a part of their overarching goals for the campaign:
- Increase Brand Awareness – Virtually every marketing campaign has been used in part to increase brand awareness, which is no different for social media influencer marketing. Brands want to ensure that they get their messages out to the broader public in a way that promotes who they are and what they offer in a way that is appealing to their target demographics via an influencer.
- Gain Traffic – Getting more traffic to a company website or driving sales in some way is a clear objective that the contract should spell out in the contract. Failure to improve the amount of traffic one receives to their website can certainly be a good enough reason to eliminate the contract deal you have set up with a social media influencer. You don’t want to continue offering a deal to such an individual if they are not providing your company with the type of returns you expect.
- Connect with a New Audience – Another explicit goal of the campaign can be to connect with a new audience you haven’t reached before. The value in doing this is that you can reach out to a group of people who might otherwise have never heard about your products or service. They may be interested in what you have to offer, but until you take the time to reach out to them, you will simply never know if this is the case. The influencer management contract terms can and should spell out this desire.
Have a Lawyer Look Over the Contract Need
It is highly recommended that you have an influencer management contract attorney review the contract you produce for your talented influencers.
The best-written contracts ensure everyone is on the same page as far as expectations are concerned, and the only way to reach that point is to use an attorney who knows how to create such a contract.
Please contact us today to set up a free consultation and get started with an experienced lawyer from our team.
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