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dzogchen
07-06-2003, 07:38 AM
An US company wants to use my artwork for printing garment eg. adult and child- Tee shirts, long sleeve Tees, sweat Shirts, night shirts, tank tops and all other upper body garment shirts.

I am offered 5% of the Net Sales of the Licensed Products.

Is this a decent deal in US? :shrug:

Serious Sam
07-06-2003, 08:09 AM
5% sounds horrible.


You should go consult your laywer.

dzogchen
07-06-2003, 08:10 AM
What then is the general percentage for royalties??

Cman
07-06-2003, 08:39 AM
The 5% is not bad, it's the "net sales" that's the bugger. And which "net" are they talking about? "Net" could mean after everyone gets paid, except you.

You should get a lawyer.

dzogchen
07-06-2003, 08:54 AM
The example given is that if they sell the product for $10 I get $.50, guess it is based on the sale price.

"Net Sales shall mean Licensees gross invoice price billed customer, less quantity discounts and returns. No costs incurred in the manufacture, sale, distribution or exploitation of the Licensed Products shall be deducted from the Net Sales."

Cman
07-06-2003, 09:59 AM
Certainly reads pretty good -


you should get a lawyer.
Or just jump in.
It all depends on how much you expect to make - if the cost of a lawyer will be more than you expect to get from the shirts, then obviously it's not worth hiring a lawyer.
Not a bad idea though, just to get one too look it over if nothing else.

Volunteer Lawyers for the Arts (http://arts.endow.gov/artforms/Manage/VLA2.html)

dzogchen
07-06-2003, 10:05 AM
Thanks Cman for the opinion and link. How does this volunteer lawyers for the arts work? I dun think volunteer = free?

isnowboard
07-06-2003, 10:20 AM
Ask for some sort of payment upfront guaranteed. Consult a professional. Find out who is doing the record keeping and how they are going to accomplish it.

terryford
07-06-2003, 02:18 PM
Congratulations dzogchen, I hope this works out for you. Although I can't help with the legal specifics I agree with the other posters who suggested seeking legal advice. I'd be sure to check exactly what rights you're assigning the client too, just to make sure it's for clothing only and not toys/posters/TV series etc :)

Let us know when/where we can get the t-shirts :)

Regards,
Terry

rickycox
07-06-2003, 03:04 PM
At a quick glance, 5% of wholesale price looks like the norm according to the 'Graphic Artist Guild' handbook.

Mike RB
07-06-2003, 04:47 PM
ask for an advance (like $5000) up front and your five percent. What will happen is that as the tshirts start to get sold you get nothing as your 5% is going to pay back the 5000$. If they ever sell enough tshirts to pay back the 5000$ you will start to then collect your 5% at that point. It unsures that if the project is a total flop you still get somthing, and it also sees how much faith they have in the project.

Mike

vorlon
07-07-2003, 03:20 AM
Please keep us up to date on what happens with your deal, we can all learn from your experience.

rock
07-07-2003, 03:32 AM
It's ok for now. If the T-shirts sell well, ask for 15-20% the next time. It's not about greed; it's about the money.

m_luscombe
07-07-2003, 04:49 PM
The difference here is Net vs. Gross.

5% of net is not very good, but the example you gave was "gross", not net.

Totally made up numbers here:

Net: Shirt sells for $10, cost of shirt is $6, freight is $0.5 per shirt, marketing, POP, etc. In this scenario, you get 5% of whatever is left after costs are deducted, which may be 5% of $3, 15 cents a shirt.

You would need to sell 24 shirts in order to buy a Venti Latte at Starbucks. No extra shots of espresso either =(

Gross: Shirt sells for $10, you get 50 cents. No muss. No fuss.

In the Net scenario, you are considered a business partner in the deal, and take a share of the profits. In this case though, you have none of the other benefits of being a partner (eg. you have no control over the cost of the shirts, the cost of manufacture, shipping, etc.)

In the Gross scenario, you are considered an expense, and your cut comes directly off the top, just like shipping or manufacturing.

He's liscensing your work, so technically you are an expense.

If he's really giving you the $10 = 50 cents example, try to agree to a set payment on each shirt, instead of confusing it with net/gross percentages. The only confusion there will be if the shirt becomes popular and he raises his price, you don't participate in the increased profits. Although, you would have made more all along, so you'd probably come out ahead anyway.

But, 15 cents is much better than nothing. I don't want to encourage you to accuse anyone of anything. I think a request for clarification would be in order =)

CG.p
07-07-2003, 08:08 PM
Someone pointed me to this thread, so I'm back on the forum....

Anyway...


"Net Sales shall mean Licensees gross invoice price billed customer, less quantity discounts and returns.

This strikes me as a load of crap. If the people selling the t-shirts want to give someone a discount why should your art be worth less?

Most of the time I've heard people getting royalties, they get screwed. Get the legal help everyone says to and keep us informed.

dzogchen
07-10-2003, 02:20 AM
Just came back from a short trip to Zurich and I got more replies, thanks.

I will go thru all opinion given and consider them.

m_luscombe: " Net: Shirt sells for $10, cost of shirt is $6, freight is $0.5 per shirt, marketing, POP, etc. In this scenario, you get 5% of whatever is left after costs are deducted, which may be 5% of $3, 15 cents a shirt." I dun think it works that way. Here is the definition of net sales stated in the agreement "Net Sales shall mean Licensees gross invoice price billed customer, less quantity discounts and returns. No costs incurred in the manufacture, sale, distribution or exploitation of the Licensed Products shall be deducted from the Net Sales." Did I interpret it wrongly?

riki: thanks for doing the checking. Now at least I feel much better.

terryford: Thanks. I hope everything works out fine for me. All these legal agreement give me the jitters. I don't think you could buy single t-shirts from them. Minimum purchase is $200 worth of stock, they are wholesale company. Beside my work is for children and female line.

Here is an excerpt from the latest correspondence from them. Sounds like they are taking a risk with my work too :eek:

"Development per design: $2000 screens, mesh, time, separations, film etc. times the amount of times to get it perfect which because of our analytical perfectionist nature can be upwards of 5 or 6 development attempts.

Stock: $36,000 per design per garment style (various sizes). Since we keep all our designs in stock and for a new design we stock 300 dozen of a design at all times that works out to 3600 of a body style times $10/shirt. This number greatly increases because of the various body styles for your line though, I think we will be starting with 4 body styles: spaghetti strap, cap sleeve and tank top for girls and children's tees. We may try them at adult tee level, but I don't think that is their market and I believe it would be self defeating. So upwards of $140,000 in stock for a single print run of a single design.

Sales/Promotion- $1000-10000 depending on if it's a line or a single image.

This is the reason we need to be committed to one another. We invest at a minimum $39,000 per design and a maximum of $150,000 per design. And if we're wrong and it doesn't sell, no one is screwed but us. "

Chewey
07-10-2003, 02:43 AM
Have you looked into whether you'll have the ability to audit their books and transactions related to the product you'll be involved with?

Cman
07-10-2003, 03:00 AM
JUST - GET - A - LAWYER!!

I'm not positive about the free lawyers, and if you gotta be US resident or what, but give it a go.
It may be nice to be friends and all, but money destroys friendships and marriages - don't go in without your contract being reviewed.
You don't have to be a jerk about it, but you should go in knowing what you are signing.

isnowboard
07-10-2003, 03:03 AM
Originally posted by dzogchen
So upwards of $140,000 in stock for a single print run of a single design.

Sales/Promotion- $1000-10000 depending on if it's a line or a single image.

This is the reason we need to be committed to one another. We invest at a minimum $39,000 per design and a maximum of $150,000 per design. And if we're wrong and it doesn't sell, no one is screwed but us. "

With these dollar figures, if they can't front you $5000 to $10000, they are bullsh*ting you. They don't have a t-shirt or a product without your artwork.

Chewey
07-10-2003, 03:10 AM
Originally posted by isnowboard
With these dollar figures, if they can't front you $5000 to $10000, they are bullsh*ting you. They don't have a t-shirt or a product without your artwork.

It's not very hard to find someone else (i.e. another eager starving artist type.) who can create original artwork for their product.

Just locate a contract lawyer who deals with intelectual property matters and pay him for an hour or two of advice regarding this matter.

If you don't do a deal with these t-shirt folks what else would you be doing with these images anyway? Posting them in online galleries for fanboys to look at and get hi fives and requests for wireframe shots in return ? Sometimes a bird in the hand is worth two in the bush.

dzogchen
07-10-2003, 03:24 AM
Originally posted by Chewey

If you don't do a deal with these t-shirt folks what else would you be doing with these images anyway? Posting them in online galleries for fanboys to look at and get hi fives and requests for wireframe shots in return ? Sometimes a bird in the hand is worth two in the bush.

Well that is exactly what I thought. 3D is only a hobby to me. If I can make something out of it , why not?

Chewey:
"Licensee agrees to keep full and accurate books of account relating to the manufacture and sale of Licensed Products under this agreement. Licensor or Licensors representative shall have the right to examine such books during normal business hours and upon not less than ten (10) days prior written request. Any discrepancies between royalties due and royalties received will become payable immediately. If an audit discloses underpayment to Licensor of ten (10) percent or more, Licensee shall reimburse Licensor for the cost of the audit. Licensee will maintain all records for two (2) years beyond the termination of this agreement."

One thing I dun live in USA and I dun know how to go about getting the relevent people to audit for me.

Cman
07-10-2003, 04:32 AM
Don't worry about audits, that's bad feelings all around. Let your lawyer be the bad guy and bring that stuff up, you be their friend.

Try the free artist link I sent you and see if they can point you in right direction.
or check your local phone book (if you guys have that).

don't try to decifer that legalese yourself, you'll only mess yourself up.

m_luscombe
07-10-2003, 06:35 AM
Originally posted by dzogchen
m_luscombe: " Net: Shirt sells for $10, cost of shirt is $6, freight is $0.5 per shirt, marketing, POP, etc. In this scenario, you get 5% of whatever is left after costs are deducted, which may be 5% of $3, 15 cents a shirt." I dun think it works that way. Here is the definition of net sales stated in the agreement "Net Sales shall mean Licensees gross invoice price billed customer, less quantity discounts and returns. No costs incurred in the manufacture, sale, distribution or exploitation of the Licensed Products shall be deducted from the Net Sales." Did I interpret it wrongly?

I have no idea. Net and gross are two different things, but they've used both in the same description. So, are they saying Net and meaning Gross, or the other way around? It does sound like a good deal, I just think you need to have a lawyer take a brief look at it.

Even if you can't get one free, it shouldn't cost you more than $100-150 to get it looked at. If you don't think it's worth that much, don't do it ;-)

Maybe my last note was too lengthy: have it looked at, don't make accusations or promises till you do. Legalese makes my head spin.

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