This article is written by Viraj Vinod Arewar pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho.
Table of Contents
Introduction
In today’s marketing world the brand ambassador agreement is a frequently executed agreement between brand owner and brand ambassador. Considering the increasing competition in the market most of the big brand owners hire or employ a celebrity as a brand ambassador to expand their business as advertisement with celebrities results in creating great influence among the targeted audience. Brand marketing through brand ambassadors is an effective way to build a relationship with the people who are related to the brand. Brand owners spend considerable amounts on hiring celebrity brand ambassadors to advertise their products and services. Hence it becomes very important for both parties to enter into a written agreement for effective protection of interest and rights in case of any future disputes.
Who is a brand ambassador?
Brand ambassadors are also known as corporate ambassadors and influencers. Generally, a brand ambassador is always a famous and influential individual who has some level of influence and a large number of people follow him or her. Examples: Virat Kohli for American Tourister Bags, Salman Khan for Pepsi, Amitabh Bacchan for Kalyan Jewellers etc. However, anyone who is representing a brand can be termed as a brand ambassador. They refer others to the brands they represent through various methods like social media, day-to-day conversation, word of mouth strategy, etc.
Multinational companies or organizations appoint brand ambassadors for many reasons but the main purpose is to increase their brand awareness and sales of products or services. Appointing a celebrity as a brand ambassador can provide many benefits to a company like representing or boosting your brand on several platforms, spreading or authenticating your brand name, impacting consumer sales, etc.
Brand ambassador agreement
A brand ambassador agreement is a legally binding agreement between a brand or company and a brand ambassador in which the former appoints brand ambassadors to promote its product and services through different platforms or channels. It is also known as an influencer contract. It formalizes and defines the relationship between a brand and a brand ambassador. This agreement is used by the companies who want to appoint the brand ambassador to legalize their relationship in connection with the promotion of the brand’s products and services. It mainly stipulates that the brand ambassador will act as the brand’s representative concerning the promotion and sales of the brand’s product.
Why make a contract for brand ambassadorship?
Brand ambassadors have to take a big role in advertising or promoting the brand, unlike spokesperson and endorsers. They have to actively work on promoting the brand before its potential customers or audience. A brand may choose to have a long term relationship with a brand ambassador owing to the benefits arising from it. Hence an effective brand ambassador agreement helps in properly presenting and limiting the work of the brand ambassador, which the brand owner expects from him or her.
It also helps in protecting the legal rights and interests of both the contracting parties by serving as a legal record and valid proof in the event of any possible disputes or differences that may arise in future relating to the contract. Like in any other contract, it helps in reassuring the parties that their contractual relationship will be carried out as agreed by them. Apart from being enforceable in a court of law it also adds to building the credibility and legitimacy of both parties.
What to include in the brand ambassadorship agreement?
A brand ambassadorship agreement includes the requirements of the brand owner that should be fulfilled by the brand ambassador in a certain period stipulated in an agreement. Typically, the brand ambassador agreement includes:
- Details of the parties entering into an agreement.
- Services or duties in connection with sales and promotion to be provided by a brand ambassador to the brand owner.
- Proper guidelines for brand ambassadors to follow while performing their contractual duties.
- Things that brand ambassadors should avoid at times of representing the brand (restrictions).
- Consideration (compensation details or commission), given to brand ambassadors by a brand owner.
- Details of the brand’s products or services which brand ambassador has to endorse.
- The obligation of the company or brand to perform in assisting brand ambassador performing his part of the contract.
- Standard terms and conditions like mode of payment, details and number of promotional events or activities to perform, confidentiality and intellectual property terms (if any), etc.
- Legal responsibilities and disclosures of parties to ensure proper compliance required by law.
- Other terms and conditions are required to be fulfilled by the parties.
The above points can also be used as checkboxes while drafting the brand ambassadorship agreement.
How to draft a brand ambassadorship agreement for a celebrity?
Most brand ambassadorship agreements are generally drafted more in favour of a company appointing brand ambassadors. So, while drafting or reviewing the brand ambassadorship agreement for a celebrity the drafter should keep in mind the rights and interests of the celebrity on a priority basis. Celebrity also has his or her reputation and influence in society. Any clash or disputes between them in a contractual period may affect his or her fame which can greatly affect a celebrity’s career in the long term. Clauses involving rights or duties of parties and force majeure need to be given due attention while drafting or reviewing such agreements for protecting the interest of celebrities.
The following are the clauses that can be included in the Brand Ambassador Agreement:
1) Title
Give a proper title to your contract. There are no further types in brand ambassadorship agreement hence one can give a title like “Brand Ambassadorship Agreement” or “Brand Ambassador Contract”.
2) Parties
Identify and state both the parties in detail. Include their names, official address (location) and other necessary things like in any other contract.
Example:
KEI (CIN no.___), a company incorporated and registered under the Companies Act, 2013 and having its Corporate office at ______ (hereinafter called the “Company” which expression shall wherever the context so requires or admits mean and includes its successors and assigns)
AND
Mr XYZ, aged about__ years, S/o _____, residing at _____ (hereinafter referred to as “Ambassador”).
3) Appointment
This clause describes or states the appointment of a brand ambassador by the company or brand.
Example:
Appointment of Brand Ambassador: (i) the company hereby appoints the ambassador as its exclusive/non-exclusive brand ambassador on the terms and conditions set forth in this agreement for the term of 3 (three) years.
4) Services/duties of brand ambassador
List out all the services and duties the Brand Ambassador has to perform which the parties in agreement have mutually decided. State each service clearly. The drafter can even make a separate schedule describing the services of the Brand Ambassador in detail.
Example:
Scope of Services: During the term of this agreement the ambassador shall serve as the company’s brand ambassador, endorser and spokesperson. He shall provide the service associated with such roles for the company. The services shall include, but not limited to the items listed in Schedule 1.
5) Restrictions
Companies will put some restrictions, which may have a bad effect on their business, on the activities of brand ambassadors while performing his or her contractual duties. Include all of them in the agreement.
Example:
Restrictions: Without the company’s prior written consent, the ambassador should not engage in the following activities:
(i) To publish or distribute any written or printed material that makes reference to the company.
(ii) To make any kind of promise or representation, or give any warranty or guarantee on behalf of the company.
(iii) To receive or collect funds on behalf of the company.
(iv) To promote, sell, represent and distribute, directly or indirectly, any products that are similar to and compete with the products of the company.
(v) To engage in X-rated and sexually explicit materials.
(vi) To promote any other questionable activities that may affect the company’s business.
6) Rights of parties
Add the clauses specifying the rights of parties.
7) Duties or obligations of the company
Brand ambassadorship agreement also involves the appointed celebrity’s reputation as well. Hence the duties of a company should be properly described to keep a balance between the parties and to safeguard the celebrity’s interest. Examples: timely assistance to be given to the brand ambassador to perform his duties, providing equipment to the brand ambassador, timely payment etc. The drafter can include them separately in representation and warranties clauses as well.
8) Consideration
Include or state the compensation clearly given to the brand ambassador by the company for his performance under a consideration clause. Make sure to write the compensation amount in words as well. A contract must be clear when it comes to compensation in agreement to avoid further confrontation between the parties. The mode of payment, the due date of payment and penalty for late payment should be incorporated in it as well to make it exhaustive.
Example:
Compensation: The company shall pay the ambassador commission equal to 5% per cent of the profits generated by the company on an annual basis.
OR
Compensation: In consideration of the obligation undertaken by the ambassador, the company shall pay ten (10) lakh rupees upon the fulfilment of duties and obligations of the brand ambassador.
9) Confidentiality clause
In case the company has to share secretive or confidential information with the brand ambassador then it is highly recommended to include confidential clauses. This will ensure that the sensitive information of the company remains secure. If there is a high level of confidential information then a separate confidentiality agreement is recommended.
Confidentiality: (i) The parties to this agreement shall not disclose the works engaged by them to any third party without the other party’s prior written consent.
(ii) The brand ambassador shall return all the confidential information owned by the company after the termination of this agreement.
(iii) The parties to this agreement agree to use the other’s confidential information only when the need arises for the purpose of fulfilling their obligation under this agreement.
10) Relationship
This clause describes the relationship between a company appointing a brand ambassador and the brand ambassador. It can be drafted as follows:
“Relationship: (i) The ambassador is an independent contractor.
(ii) The relationship between the parties to this agreement shall not be construed to be that of partnership, joint venture, employer-employee or agency of any kind.”
11) Exclusivity clause
The company or brand may want to include an exclusivity clause or non-compete and non-solicitation clause to restrict the brand ambassador from communicating with the company’s employees, directly or indirectly and simultaneously promoting other rival companies. While negotiating on this part, make sure to keep the period of non-compete and non-solicitation period to its minimum so that it won’t affect the celebrity in the long term.
Example:
Non-Competition: The ambassador shall not promote, represent, sell or distribute any products that are similar to the company’s products, either directly or indirectly, during the term of this agreement and for a period of 14(fourteen) months after the termination of this agreement.
Non-Solicitation: The ambassador will not solicit or communicate with the people in connection with the company, either directly or indirectly.
12) Products and service details
List out all the details regarding the company’s products and services which the brand ambassador has to undertake for promotion. A separate schedule added to the agreement is more preferred for this purpose.
13) Dispute resolution clause
As appointing a celebrity as a brand ambassador involves high costs, an effective dispute resolution clause becomes important to include. Include the details on how to handle a breach, who will pay the legal fees in the process, methods of resolution process before approaching courts (arbitration, litigation or mediation) etc.
14) Boilerplate clauses
At last draft all the boilerplate clauses such as term and termination clause, notice, assignment clause, severability, indemnity clause, force majeure, governing law etc. Even though they are present in almost all types of contracts they may vary depending on the situation or needs of parties involved in the agreement. Make sure that they should be tailored to suit the needs of celebrities.
There is no comprehensive law in India for regulating and monitoring misleading advertisements by celebrities. However, the Advertising Standards Council of India (ASCI) Code (“Code”) provides certain guidelines for celebrities in this regard. According to the said Code, the celebrities are expected to have knowledge of this Code while making Advertisements. Even though this code does not provide any penalties but according to Section 21 of the Consumer Protection Act (CPA) 2019 a celebrity can be held liable and penalized for misleading advertisements. The Central Authority formed under CPA, 2019 can impose a penalty that extends to ten lakh rupees and up to fifty lakh rupees for every subsequent breach. Hence apart from above the clauses, a compliance clause to this effect should be added in the brand ambassadorship agreement.
Conclusion
Draft the agreement in lucid and clear language as far as possible and in case your agreement contains complex legal terms then you can define them at the beginning of the agreement, under the definition clause. If the agreement requires the brand ambassador to make social posts on any platform then you can include the clause which states that when a brand ambassador can remove that post. Such a clause becomes important for a celebrity as his or her fans may dislike multiple advertisements. You can also add the clause stipulating that the brand ambassador is not required to accept any particular request coming from a company to provide any other service apart from those included in the brand ambassadorship agreement to be on a safer side for the protection of interest of celebrity.
Format for brand ambassador agreement for a celebrity
Following is the sample format of the brand ambassador agreement:
Brand Ambassador Agreement
This Brand Ambassador Agreement (“Agreement”) is made on _____ (“Effective Date”) executed at _______(Place)
Between
KEI (CIN no.___), a company incorporated and registered under the Companies Act, 2013 and having its Corporate office at ______ (hereinafter called the “Company” which expression shall wherever the context so requires or admits mean and includes its successors and assigns)
AND
Mr XYZ, aged about__ years, S/o _____, residing at _____ (hereinafter referred to as “Ambassador”)
Who are hereinafter collectively referred to as “Parties” and individually as “Party”.
WHEREAS
- The Company is engaged in the business of selling _______ (names of company’s products) under the _______ (name of the brand).
- The Ambassador agrees to act as the Company’s representative in connection with the promotion and sale of the products of the company.
- The Ambassador is qualified and has the necessary experience to act as the Company’s representative in connection with the promotion and sale of the Company’s products.
It is agreed as follows:
- Appointment of Brand Ambassador
1.1The Company hereby appoints the Ambassador as its exclusive/non-exclusive Brand Ambassador on the terms and conditions set forth in this Agreement for the Term of this Agreement.
1.2 The Ambassador accepts the appointment of Brand Ambassador of the Company for the Term of this Agreement.
- Brand Ambassador’s duties
The following are the duties of the Brand Ambassador:-
- To create honest, factual and original content for the promotion of products of the Company;
- To engage with Company’s social platforms, including but not limited to, Facebook, Instagram, Twitter, Youtube, Linkedin;
- To deliver public or private lectures, seminars and events;
- To achieve and maintain the level of knowledge with respect to the Company’s product.
- Restrictions
The Ambassador must not engage in the following activities without the prior permission of the Company:
- To use the brand of the Company in any domain name;
- To make any kind of promise or representation on behalf of the Company;
- To give any warranty or guarantee in relation to Company’s products;
- To receive or accept any fund on behalf of the Company;
- To sale Company’s products different from official prices;
- To engage or promote in any kind of illegal activities;
- To create, publish and distribute any written material in connection with the Company.
- Term
4.1 The term of this Agreement is 3 (three) years from the effective date (“Term”).
4.2 This Agreement may be renewed or extended by the written agreement of the Parties.
- Company’s obligation
The following are the obligation of the Company:
- To provide the Ambassador, at its own expense, the relevant material needed for the promotion of products of the Company;
- To provide timely compensation to the Ambassador for the service under this Agreement;
- To provide necessary sales assistance to the Ambassador, from time to time, to perform its obligation under this Agreement;
- To provide the necessary training to the Ambassador when the needs arise to that effect;
- To send the price list along with terms and conditions of the Company’s products.
- Compensation
6.1 In consideration of the obligation undertaken by the Ambassador, the Company shall pay______ rupees upon the fulfilment of duties and obligations of the Brand Ambassador.
6.2 In case any deduction in compensation is required under any law, then the Company shall do all things in its power to assist the Ambassador to claim exemption.
- Confidentiality
7.1 The Parties shall not disclose the works engaged by them to any third party without the other Party’s, 14 (fourteen) days prior written consent/notice.
7.2 The parties will use the Confidential Information only as necessary to fulfil its obligation under this Agreement.
7.3 The Parties shall promptly notify the other party of any unauthorized use or disclosure of the other Party’s Confidential Information.
7.4 The Brand Ambassador shall return all the confidential information owned by the Company after the termination of this Agreement.
- Notice
8.1 Any kind of notice to be given by one Party to the other Party in connection with this Agreement shall be in writing.
8.2 The address of the Parties for the purpose of clause 8.1 is as follows:
Company name:-
Address:-
Email:-
Ambassador’s name:-
Address:-
Email:-
8.3 All notices under or in connection with this Agreement shall be in English language only.
- Representations and warranties
9.1 The Ambassador represents and warrants to the Company that:
(i) Ambassador has the full and unrestricted right and authority to enter into this Agreement;
(ii) Ambassador has complied and will comply with all applicable laws, rules and regulations in providing the services to be performed under this Agreement;
(iii)The service provided by the Ambassador shall not contain any disparaging, pornographic, defamatory and/or offensive material; and
(iv) The Ambassador shall perform the services in a timely and professional manner.
9.2 The Company represents and warrants to the Ambassador that:
(i) The Company has the right to enter into this and to perform its duties and obligation hereunder;
(ii) The Company has the ownership and possession of necessary rights, titles and licenses that are necessary to perform its duties or obligations hereunder; and
(iii) The Company shall perform all its duties or obligations in a professional manner.
- Termination
Company shall have the right, at its sole option, to terminate this Agreement immediately in the event that:
(i) The Ambassador materially breaches any provision(s) of this Agreement;
(ii)The Ambassador fails neglects or refuses to fully perform any of the obligations to be performed hereunder;
(iii) The Ambassador commits any act or does anything that is or shall be an offence involving moral turpitude under any laws, or which brings the Ambassador, or Company into public disrepute, contempt, scandal, or ridicule, or which insults or offends the community or any substantial organized group thereof, or which might tend to injure the success of any Company.
- Independent contractor
11.1The Ambassador is an independent contractor.
11.2The relationship between the Parties to this Agreement shall not be construed to be that of partnership, joint venture, employer-employee or agency of any kind.”
- Severability
In case any of the provision(s) of this Agreement be held invalid by any competent authority, the same shall apply only to the said provision and the remaining provisions shall remain valid and enforceable.
- Governing law
This Agreement shall be governed by and construed with the laws of India
- Dispute resolution
14.1 In case of any disputes, differences or claims arising out of this Agreement between the Parties shall be settled by Arbitration under Arbitration and Conciliation Act 1996.
14.2 One Party has to serve 14(days) prior written notice to the other Party for the commencement of arbitration proceedings.
14.3 The seat of the arbitration shall be ___.
14.4 The arbitration proceedings shall be conducted in the English language only.
14.5 The place of Arbitration shall be _____.
14.6 The costs and expenses of the arbitration shall be borne by the Parties equally.
- Indemnification
Each Party shall indemnify and hold harmless the other Party at all times from and against any claims, damage, penalties or losses incurred upon a breach of any provision(s) of this Agreement.
- Assignment
The Parties shall not assign their rights and obligations under this Agreement to any other Party or third party without the prior written consent of the other Party.
- Counterparts
This Agreement may be executed in any number of counterparts, and each such counterpart of this Agreement shall be deemed to be an original instrument, but all such counterparts together shall constitute one agreement.
18 Amendments
This Agreement may not be modified or amended, or any of the provisions of this Agreement waived, except by written agreement of the Parties.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date and year first written above.
Ambassador’s Name Company Representative’s Name
_________________________ _____________________
( Signature) ( Signature)
Reference
- https://blog.inzpire.me/brand-ambassador-contract/#Whats_a_brand_ambassador_contract
- https://www.agreements.org/brand-ambassador-contract.html/
- https://www.legalbites.in/how-to-draft-an-employment-contract/
- https://www.approveme.com/contracts/brand-ambassador-contract-template/
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