What should athletes consider before licensing a product?

On Behalf of | Apr 16, 2024 | Business Law

Those who participate in action sports can quickly create a viable personal brand. Social media makes it easier than ever before for people to share footage of their snowboarding skills or skateboarding prowess with members of the public.

Those who enjoy such performances may turn into loyal fans who attend competitions, consume someone’s social media content and even take their product recommendations to heart. It can be very lucrative for action sports professionals to license products. Before doing so, however, there are several factors they need to take into consideration.

Brand and product trustworthiness are key

Part of what sets the action sports sector apart from other types of athleticism is the inherent risk involved. The potential for severe injury is more likely when skateboarding on a halfpipe as opposed to playing a sport like soccer. Therefore, equipment is crucial to someone’s safety, as well as their ability to achieve certain performance standards. Any action sports professionals considering a licensing deal need to trust not just the brand offering them the licensing opportunity but also the specific products. There have been many safety-critical recalls of action sports equipment. Any relationship to a recall could damage someone’s personal brand.

Contract inclusions could limit future licensing options

Licensing agreements can sometimes include terms that unfairly and unnecessarily limit the economic activity of action sports stars and social media celebrities. For example, there might be restrictive covenants that prevent the person agreeing to the licensing arrangement from discussing details about how the company operates in the future. They may also end up subject to terms that prevent them from partnering with other companies in the same industry for several years. In some cases, businesses include provisions that allow them to cancel licensing arrangements and even demand reimbursement for licensing fees paid if an athlete fails to consistently perform or meet certain branding standards.

Licensing deals can be an excellent source of revenue for those involved in action sports, but they can also damage someone’s reputation or economic prospects. Carefully reviewing contracts for proposed action sports licensing deals with the right support can lead to better arrangements for those trying to monetize their athletic prowess.