Contracts!!! All I want is to be FAIR no more no LESS
Hello Forum,
I am a long time first time!
I am in need of advice and I apologize for the novel displayed before you. I just wanted to make sure that I am being clear as possible with my issue.
Last night I met up with a few artists that I would like to design my line, and as we were discussing contracts it seems as if they want their cake and eat it too. I truly am a selfless person who is only trying to be one thing…fair. I believe in karma and doing the right thing by all. I understand one hand washes the other in any relationship, never mind business.
I don’t have as much capital as I would like but I believe that my hard work and desire will supplement for the lack there of. With that being said, I have vested so for a little over $5,000 and plan on putting another $10,000 to $15,000 to get things off the ground. I know it is not much but it should get me to a point where I can see what is working and more importantly what is not. I am also able to get more for my dollar, as I have 3 artists and graphic and web designer working for no upfront pay however, that is where confusion settles in. I know, I know, hind site is 20/20, and I should have had contracts in place from day one.
Before I get into the details I understand that the consequences that can occur by giving up ownership of a company, and how the relationships change over night. That is why the LLC is set-up as a single member for now and is subjected to change with time. So here are some details:
Equity Details:
Capital: 100% Mine (at this point) Sweat Equity (up to this point): · 85% ME · 5% “A” · 5% “B” · 5% “C”
People Involved:
Founder: ME Artist:” A” Artist: “B” Artist: “C”
What would be the FAIREST strategy to make sure everyone is compensated not only their work, but also their belief in the company. Here is an example that was presented to me which I find wrong for many reasons however, I am willing to work within the skeleton of the idea but no business man in their right mind would conform to this arrangement.
The Profits/shirt is based off of a break-even-analysis payment system. There would be NO charge at all for the art created. I also would not be obligated to pay the artist until we sold enough shirts to pay the cost of doing the run. Everything after that would be 50/50 split. From a risk stand point it cuts it down dramatically. From a profitability/growth stand point the company takes a pretty big hit. How? Well, each artist also wants 10% of the company. So they not only want 50% of the profits every time their art sells but they also want return on investment in the backend. Hence, eat their cake and having it too.
This is the part that I am having a really touch time agreeing with and for many reasons. First off, I understand for a company to grow, you need to bring your cost down and ultimately increase profitability. You do this by reinvesting back into the company and having more capital for purchasing power, simple business 101. I wouldn’t be able to do this with profits being split 50/50. Secondly, it also doesn’t make sense to reinvest my 50% back into the company for growth, knowing that money is only making their 10% more. This much money being paid out on every run is only going to hinder the growth potential.
I would love for the artists to have a long term vested interest in the company, as I know good artist are hard to come by. I also have no problem giving up ownership of the company under the right terms. However, this formula doesn’t motivate me to want to conduct business. So basically I really don’t know what to think of all this expect for the fact that it seems skewed in the artist favor. I mean in a perfect world, I would hire them as full time designers. As we all know that is not an option for a start up company. I also would pay fair wage under a Work for Hire contract but they don’t want to work under those terms. So I lean on anyone that can help me find a way to make this situation a win-win. Even if you don’t reply I do appreciate you taking the time to read my post. I hope for some this is a learning experience to figure out the contracts in advance.
Re: Contracts!!! All I want is to be FAIR no more no LESS
best way to do it is to just pay the artists off per design that you like....or hire them part time and give a deadline per designs....
unless you plan on getting into alot of accounting and company setups/etc..... its best to just do a "paid for hire" contract.....
i am planning on doing that for a few ideas i have...... i respect my artist friends also...but it's really business....
most artists can whip out an idea in a few minutes/etc...... but the development might take some time....
i would set up the designs on a per image basis....... say 100-250 an image..... all depending on the idea....
you are gonna have to test the market with the designs..... so if the artist does work that doesnt sell, does he/she still have a part of the company?.......
also in the contract state that you are the sole owner of the design once paid for.....
Re: Contracts!!! All I want is to be FAIR no more no LESS
I question giving ownership interest to artists simply because they are providing artwork. If they are not providing start-up capital, they should not have ownership.
What happens when you get tired of their work? Worse, what happens when your customer gets tired of their work?
They get paid for their work. They can use their work made for you in their portfolio or personal use, but nothing else.
I wouldn't think of having just one or two artists design for me. I love the fact i can use however many and whoever I want to. I think it helps prevent your site from becoming stale.
There is so many quality designs out there from so many artists that we are finding we can get quality designs and pay the artist just based on the number of sales of his design on our clothing.
Re: Contracts!!! All I want is to be FAIR no more no LESS
I appreciate the feedback. I understand all that has been said the thing that is killing me no matter how I present it they think they are getting the raw deal. This one guy has a sour taste in his mouth about the time he was paid $10.00/hr to work at a place and they are still selling his designs today. In his eyes that will never happen again but the way I see it is that is how the business is run. I guess I will have to hunt for some artists that can fit the mold of my business. Got to get going as the Celtics are on GO GREEN!
Re: Contracts!!! All I want is to be FAIR no more no LESS
I agree with your basic sentiment, YOUR business will end up failing. Who would work for about a 25% markup here? (And that isn't taking in to account the fact that what happens when 1 Artist decides to leave and expects to be bought out? What are the payment terms? What is the minimum commitment from them? You could end up with 1 artist who's work is selling well and 2 who sit back and enjoy the ride (although not paid for "sales" they watch their "share" in the business grow) then the artist who is working well decides he's had enough and opens in competition with the money you need to pay out to buy his "share". Bye bye business.
As others have said I would be looking at pay per design. You would be better picking 3-4 designs that you think will work (not necessarily the 3-4 you like) paying for them and using them than going ahead with 50 designs and making nothing.
You have at least 1 "Artist" who has been burn't (in his eyes) before and now wants the world from you with out giving you anything. This story reminds me of the vineyard workers in the bible. Basically through out the day people were offerred money to pick in the vineyards. The ones who worked the shortest hours were paid the same as those who had started at first light. All were offered a set "pay" for the days work but those that started early complained they had done most of the work for the same pay. The answer was simple, you were happy to work for the wage until you thought you were being treated unfairly.
The artist agreed to work for $10 an hour to produce artwork. Now he thinks he should have got paid more because it worked. Does he think he should have to give the old employer a refund for any designs that didn't work?
He agreed to get paid to do a job, he did and they paid. What is his problem? His mindset could cause you even greater problems down the track because he will never be satisfied for what he got, he'll only ever see the glass as half empty. Better finding someone who fits your thinking better.
Re: Contracts!!! All I want is to be FAIR no more no LESS
Quote:
Originally Posted by SS
I appreciate the feedback. I understand all that has been said the thing that is killing me no matter how I present it they think they are getting the raw deal. This one guy has a sour taste in his mouth about the time he was paid $10.00/hr to work at a place and they are still selling his designs today. In his eyes that will never happen again but the way I see it is that is how the business is run. I guess I will have to hunt for some artists that can fit the mold of my business.
Given your current situation, I'd probably take them off the plate as biz partners and let them 'own' all their own designs with the understanding: if they are with you, they get 50/50 with no investment up front.
If you, or any of them, decide to break off that relationship their art goes with them.
That way as long as you keep your end of the bargin, they "should" be happy with owning all rights to their work and spliting with you.
Of course Im assuming you just don't have the money to afford their asking hourly rate, right now. probably in the 'hood of $30-$50 or so if they are not totally established. If you can afford the rate & think their work will sell for you, that would be the way to fly in your best long term interest. Tie em to a drafting chair, make them crank out the work asap, then cut them loose when you have enough or run out of dough. If you cant afford that situation, sounds like you have to allow them to own their art.
That's about the best I can come up with and stay somewhat along your current agreement, since you already have your one foot in the mud, so to speak.
Re: Contracts!!! All I want is to be FAIR no more no LESS
Hi,
Well, if this helps at all, I am a working artist and (newly expanded into) screenprinter.
Working artist for a number of years (31+yrs)
Anyway, that being said, I have definitely been scr#wed as an artist, but, live and learn.
Most working artists have been ripped off, and I have to say, after it's happened to you (me) a few times, you try and protect yourself.
What I would suggest for you isNO, don't make them partial owners in your company.
Instead, there are different ways to go that should give your artists what will make them happy.
Also, you've got to protect yourself, including control over your company.
You're not looking for partners.
1. You can have them create their artwork and they can give you 'use' but, retain ownership of the art. (and you can agree on X amount of $ for them per design after X number of shirts have been sold)
2. You can buy all the rights outright upfront at an agreed price. (they probably won't go for this one, because they sound like they really want a piece of your $$$)
BTW, there are simple forms available to cover whichever way you want to go.
It does sound to me like the artists have had their own brainstorming sessions and feel that they've 'got ya' over a barrel.
NO, stand firm, but yes, fair.
I'd suggest also letting them know that you're not looking for business partners, but good sub-contractors. And yes, there are other artists out there.
Re: Contracts!!! All I want is to be FAIR no more no LESS
Here's the point from an artist view....and a very similar situation with our LLC.
First off....I guess you could say I might be a little biased towards the artist, because I am one...but I am also the "founder" of my company also, and I deal with many artists....honestly baing the founder means very little....it's the dedication, pride and workload, that make the business run....and a good partner can have that same drive.
but if you are dishing out partnership stakes - be very careful
especially since I see you listed "sweat equity".....in a start up that's very powerful, but everyones sweat has equity value, and it's hard to argue against it, if you count your own.
I'm not really sure how unique or successful your company is already, or how novice the artists are that your dealing with in the apparel industry....but that is a huge part of your situation I guess.
Alot of aspects go into this...the Design talent, the garment, the marketing, the sales talent, the commitment...the dedication, the persistence....
but if I'm doing the work that ultimately gets these t-shirts sold of course I want proper compensation.
That goes for the sales person, the owner and the designer...
If your company is at zero now....that's a hard point to argue against....
but hell some people can sell anything....some have amazing talents in sales
however if your established, it's pretty easy to say...your designs won't be only the reason I'm successful.
in the end Top notch talent in any area can bring success....so it may be worth it.
whether it's dedication, ideas....art....sales people...printers...garments..etc.
but then again...you may not need them at all
but if you a building a true partnership, it really has to have everyone working on all aspects to grow the company together.
If really all you are looking for is an easier way to boost you brand at the start...you'd be better going freelance for your designs, and grow your business that way.....or form a real partnership, and have everyone onboard with both workload, and monetary investment.
Hell - you can write into your contract, so much $$ has to be reinvested off sales, until their $$ amount matches yours.....
...actually we reissue additional shares of the company bi-annually to either increase or decrease the amount each member has in the company, based on their input.
a little long winded...sorry
__________________ www.eternyl.com The Eternyl Store - Blog - Studio
Re: Contracts!!! All I want is to be FAIR no more no LESS
SS, there is some good advice here.. My advice would be to talk to a corporate lawyer. They can help you sort it out, make sure that your contract (whatever you decide on) will hold up down the road if things don't go so well.
Re: Contracts!!! All I want is to be FAIR no more no LESS
you can write a employment contract outlining a fair salary based on commision, granting the artist a percentage of all sales per item sold. we pay our artist 15% of every sale. it sounds like alot because it is. i dont suggest you giving these guys that much unless there are willing to some additional dutys to promote sales. our artists 15% of sales is looked at as a percentage of the company as long as he works for us. and you can put some clauses in the contract preventing them from working for any other clothing line for a period of time. we own all artwork made for our company t's from our artist, but if next week he takes off he gets paid for the remaining work he put out. i hope i didnt confuse you too much. just some points we used. and one thing i know for sure is have a lawer go over the contract BEFORE signing.
Re: Contracts!!! All I want is to be FAIR no more no LESS
There are thousands upon thousands of artist out there that will sign over ownership no problem if you pay them...There is no reason that you can't get 10 designs for a couple grand...And if you use just one artist to start out with, you can probably get a better deal then that...
Get a line up and running and see if you have what it takes to actually get the shirts sold...Concentrate on the branding and marketing of your line...
The last thing you want to be doing is going over marketing/business stradegy with an artist...Its not like you will have any time in a day to do that anyway...
Having three artists who want part of your business is going to more headach's then you could ever imagine IMOP...
Not only that, if your business actually takes off, you will have artists that will want to design a shirt for you just so they can use it in there portfolio...
Remember this...Don't get walked on...It is YOUR business...If anyone wants to think otherwise, simply cut them loose...
Re: Contracts!!! All I want is to be FAIR no more no LESS
Your payment plan is very complicated. As an artist all I want is to get payed for my work and I'm not going to hand over a print ready file until I have the money in my hand. I've heard to many horror story's of designers not getting paid.
If you pay the designers what they're worth up front I can't see them complaining about getting a portion of the profits. Write up a contract and negotiate the terms with them, it's not to late.
Re: Contracts!!! All I want is to be FAIR no more no LESS
This is a easy problem to solve. Look,,,,,,,, pay them for each individual design! Remember it's YOUR company so you make the rules. If they don't want the work, HIRE OTHER DESIGNERS! Trust me there are many out there. You're treating them as if they are the only designers on planet. Tell them, " these are the terms. Take it or leave it!" Guess what? THEY WILL TAKE IT!
You have created this problem because you failed to be a LEADER and TRUE BUISNESS person.
If you can't negotiate simple agreements with designers you will get KILLED by buyers, ect. Get a backbone and take control over YOUR company. It would be FOOLISH to even consider giving up a percentage of your company. Obviously they see potential in what you're trying to do which is the reason they want part of the company. Ttust me they won't walk. They will agree to your terms/conditions Dude, WAKE UP!!
This is a discussion about Contracts!!! All I want is to be FAIR no more no LESS that was posted in the General T-Shirt Selling Discussion section of the forums.
Contracts!!! All I want is to be FAIR no more no LESS 
