Important matters to consider when negotiating a sponsorship agreement?
By sponsoring a community event, business lunch or sportsperson or team you can engage with the community in a way that allows you to get your brand or business presence out there or “give back”.
However, regardless of whether you are the sponsor or the recipient of sponsorship, you need to be aware of your legal obligations. You should formalise any verbal negotiations that you and the other party agree to with a written sponsorship agreement, to ensure that everyone is clear in relation to their obligations.
The following items should be considered when you are negotiating a sponsorship agreement
Commencement Date - When will the agreement commence?
Term - How long do you intend the term of the sponsorship agreement?
Option to Extend - Can this term be extended if the sponsorship is working out? Who gets to make that decision?
Benefits - What benefits will you or the other party receive in exchange for sponsorship? For example, the right to speak at an event or agreed promotional activities (i.e 10% signage for an event).
Payment - What is the agreed amount to be paid or received in exchange for sponsorship? Is the payment conditional on the recipient meeting any KPIs?
Key Dates – What dates are agreed for proposed events, advertisements etc.?
Exclusivity clause – Is the agreement exclusive agreement between you and the other party? If so, you may need to consider a list (or definition) of competitors who you do not wish to be alternate sponsors or otherwise involved in events or with the recipient.
Events - What kind of events are agreed (i.e. online or face-to-face, or a combination)?
Flexibility - Will the agreement include a clause to allow face-to-face events to become online events in certain circumstance? This is a particularly important consideration in the wake of COVID-19 as border closures and illness can prevent face-to-face obligations being performed.
Confidential information – Do you require your information treated with confidence and privacy?
Intellectual Property – how would you like your logos and documents protected from use without your knowledge? Who owns IP created for the purpose of an event?
Monitoring and Review – will you require the other party to regularly touch base in relation to events (i.e. quarterly or two weeks after each event).
Termination – What repayment obligations are you willing to agree to if either you or the other party terminate the agreement?
Please contact our office if we can assist you with your negotiations and if you require your sponsorship agreement formalised.
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