At the Partnership Group – Sponsorship Specialists™, we work daily with sponsors and selling properties. These are the two essential entities in any sponsorship deal. We help our brand clients to review proposals, plan activation, develop measurement tools, and evaluate sponsorship investments. We work with our property clients to ensure they know what they have to sell, what those assets are worth, and how to build custom proposals for sponsors that will deliver results for both parties. But when it comes to the final legal contract, we leave that to the lawyers.
I was working with an organization that had a major partnership with a brand. It was a great partnership, but they had no real contract. They had a letter of agreement that stated the amount to be paid annually by the sponsor, and in general, what the sponsor would get in return. It was less than two full pages. I am not a lawyer, but I do understand business. This is not sufficient. Then a couple of weeks later, I was working with another client that had “contract issues.” They were working with a new prospect. But they failed to understand that an existing sponsor considered the new prospect a direct competitor. There was a huge uproar. The existing sponsor threatened to walk away with all its money. The prospect felt cheated because it had been led down the garden path. When the contract was reviewed, there was nothing in it about exclusivity. In fact, there really wasn’t a contract at all. It was a three page letter of agreement that did not outline expectations or obligations.
Contracts need to have detail. They need to outline expectations, terns of payment, obligations, and such. Everything needs to be there. I hate to say it, but it needs to look like a pre-nuptial agreement. As you climb into bed with your sponsorship partner and get married, make sure you know what to expect from each other and that you are covered in case something goes wrong down the road.
Back in December, I read a great article in the Hilborn E-News (Canadian Fundraising and Philanthropy) written by Sharon Groom, who is a partner at McMillan LLP in Toronto. It was an overview of critical elements in sponsorship agreements ranging from property restrictions to products and services, and from trademarks to termination. I encourage you to read this article on the Hilborn site. Sharon will also be presenting in person at the SMCC Western Sponsorship Congress™ in Calgary in October.
These are just one person’s thoughts. Yours are welcomed as well. Please add your thoughts or comments below. Thank you for reading and your feedback.