Every year I write a white paper for the Chicago Toy and Game Group’s website, this year it’s on contract termination clauses. Hope you enjoy it! And if you want more advice along these lines, consider attending one of the ChiTAG conferences. They’re great for inventors of all levels, not just for all of the fantastic information, but the industry networking is unmatched by any other event.
Termination: Avoiding a Slow Long Death
Someone wants to license your amazing concept! Congrats! But before you can even come close to posting toy/game aisle selfies of you and your awesome idea, you need to tackle the contract. There are so many little pitfalls to avoid when it comes to a toy/game contract, but don’t forget to look at the bigger picture. While no one likes to think about what happens when a toy/game has run its course when the product hasn’t even been made, but nailing down the terms of termination is vital. When you’re reading through your contract, always look to see what causes the rights revert back to you.
To me it’s a big red flag if it’s entirely up to the manufacturer/publisher to decide when they’re done with my concept. I prefer setting out a minimum amount of royalties paid per year, but you could also do a minimum number of items sold. This isn’t a huge ask either, it’s rather reasonable to assume that a company won’t want the concept if it’s not selling well. But you need to put it in writing so there’s no chance of it languishing in a company’s product line well beyond its expiration date.
Why does it matter? Because what’s old always seems to become new again at some point, but it takes time for the staleness to wear-off and the coolness to reemerge (sometimes it requires some additional tweaking, but that’s for another white paper.) Yet, the coolness will never come if it’s sitting in someone’s product line year after year selling only a dozen or so pieces. That’s just making the stink permanent – and you definitely don’t want that on your once-shiny-and-new great idea!
Sadly, a contract can terminate before the product has even launched. Don’t let a company wait forever to launch your toy/game. Agree on a reasonable timeframe and put in writing that it needs to be launched by then or they will be in breach of contract. A breach isn’t a definitive end to a contract, it just starts a discussion on how the initial plans aren’t being met and gives you legal ground to have it remedied. If they no longer want your concept, the contract terminates. Hopefully it hasn’t been too long and the non-refundable advance helps with the pain, and now you find someone else who wants your still-relevant awesome idea.
When you sign a contract, it probably won’t be forever. (But kudos to you if the product is has reached “evergreen” status and has consistently good numbers!) Most toys/games have some sort of “expiration” and before it’s dingy and dated from being on the market too long, you’ll want it back so it has a chance of life in the future. Just make sure your contract allows that to happen.
While your here, PLEASE VOTE
You may have heard that I’m up for at TAGIE for Game Innovator of the Year at this upcoming Chicago Toy and Game Week, but I need votes! You can vote 1 time per device. Click the blue VOTE HERE right under the title and I’m on the second page: https://www.chitag.com/2019-tagie-finalists-revealed