Wednesday, March 21, 2012

Can you put together a celebrity fragrance deal?

Let's just say you know someone who is a celebrity, perhaps not a very big celebrity (which may be good!) but at least a celebrity in your city or region or among your social media group. How would you like to put out a celebrity fragrance using this person as your celebrity?

There are a few things you'll need that you probably understand already. First you have to be able to produce a fragrance. You can learn how to do this on just about any scale by reading "Creating Your Own Perfume With A 1700 Percent Markup!"

Then you have to be able to market this fragrance. You can get some ideas on how to do this by reading "Basic Strategies For Selling Your Own Perfume!"

But what makes this project special is that you are going to do it in the name of this local celebrity you know or know of and this means you have to negotiate a deal with her or him or their agent or manager if they have one.

As you go over the deal in your head it probably looks something like this: "You give me your name, image and fame; I'll make up a fragrance and sell it in your name and we'll divide the profits." Simple.

Alas, if you've never seen egos collide you are about to. It will be ugly and it will probably happen before your have earned a penny. While you, the enterprising marketer, are going to do all the work, pay all the expenses and take all the risk, your celebrity suddenly gets millionaire visions and sees you hogging all that money while they are getting screwed. Explosion! It is time now for serious negotiations.

I have seen these explosions. They can be very surprising to any budding entrepreneur or promoter who thinks he or she is working on the basis of friendship. You wouldn't be anything else but perfectly ethical and honest. But surprise! Dreams of great wealth have a way of twisting otherwise level headed heads. It really is time now for serious negotiations.

Negotiations. Why? What?

Vigorous arms-length negotiations before you launch your promotion can save you endless future headaches. But what do you need to negotiate? There can't be too much to it ... or can there?

Let's look at a few issues. You're going to be doing almost all the work -- but you'll be using your celebrity's name and fame. You're doing it to make money for yourself but you know, or you should know, that once things get rolling your celebrity is going to be looking for money too. So how do you work that?

At one time some fairly well known celebrities could be hired -- for a fee -- to endorse a fragrance. Of course this involved what seemed at the time to be a fairly substantial fee, and it was guaranteed, up front, regardless of whether the marketer made money or not.

Today royalty agreements are more common. You negotiate a license with the celebrity or, in reality, with their managers and lawyers.

But what is this royalty? And is that all that needs to be negotiated?

In fact, setting a royalty rate and negotiating how it will be calculated and paid is a fine art in itself. In your case look at the complications. Suppose the royalty is on sales -- but you make some sales yourself, directly to consumers, and other sales to stores which then sell to consumers -- two different types of sales so are there going to be two different royalty rates?

And what about your expenses? Can they be deducted? What about stores that fail to pay you for the bottles you gave them? Can that loss be deducted?

What about a failed promotion? Does your celebrity now get nothing or is there a guarantee? And does the celebrity get any money up front? And is that a signing bonus or an advance on royalties which later must be earned? When are the payments to your celebrity due? How can he or she check on your accounting to make sure it is honest? What happens if one of you wants to get out of the deal? What happens if somebody sues you claiming they were harmed by your fragrance? Does your celebrity get dragged into a lawsuit, even though he or she had nothing to do with making the fragrance?

Negotiating a workable understanding -- a license -- is the heart of any celebrity fragrance deal. These deals are usually negotiated by lawyers but if you, on a small scale, want to wing it with a local celebrity, at least want to be aware of the important issues. And you want your celebrity (or her boyfriend, his girlfriend, or their manager) to be aware of what you are doing and to understand the implications. And you want to get it all down in writing, even if you're only writing up a simple letter of agreement.

My thoughts on this topic and some of the points I discovered while reviewing a major celebrity's license with an un-famous marketer led me to write up a simple introduction to this topic -- "Setting Up Your Own Celebrity Fragrance Deal: Introduction to the Basics" -- which you can purchase and download at my website.