Influencer Management: Drafting Contracts When Influencers Change Agencies
A common problem in influencer management, which I as a lawyer am often confronted with, is when an influencer changes to another agency while contract negotiations are ongoing with clients that the original management had initiated. Many of my clients from the agency sector ask how they can protect themselves in such cases and ensure they receive commissions for their work.
Unfortunately, I often have to give unsatisfactory answers. The legal situation is anything but clear. There is hardly any case law on this specific constellation, and everything depends on the circumstances of the individual case. However, I always strive to protect my clients' interests as best as possible through clever contract drafting.
Nevertheless, a residual risk often remains. Especially with premature termination of a contract by the influencer, we are operating in a legal grey area. In this article, I will outline some possibilities for agencies to implement contractual precautions to at least partially safeguard their position. While there's no single perfect solution, understanding typical pitfalls and drafting contracts carefully can put you a significant step ahead.
Contractual Regulations on Agency Changes
Cases where influencer management contracts are deliberately terminated to "poach" ongoing contract negotiations and avoid commissions are particularly problematic. This raises the question of what claims the agency is entitled to. Primarily, such premature termination of the contract may constitute a breach of contract.
The agency could then potentially have claims for damages under §§ 280 ff. BGB for breach of contractual duties. However, proving specific damage and fault on the part of the influencer can often be difficult. To make matters worse, there is hardly any case law on this constellation. In the absence of clear rulings, significant legal uncertainty exists regarding the enforceability of any claims. This makes clear contractual agreements all the more important to avoid disputes from the outset.
In particular, contractual penalties in the event of an influencer's premature, contract-breaching exit can be considered. By agreeing to a contractual penalty, the agency would not need to prove specific damage. However, the contractual penalty must not be disproportionately high, as it could otherwise be invalid.
Clauses that prohibit the influencer from concluding contracts with clients with whom the agency was already in negotiations for a certain period after the end of the contract would also be conceivable. However, such provisions are legally tricky, as they restrict the influencer's professional freedom. They must be moderate in terms of time and content.
Finally, the agency should ensure that the services it provides are documented as precisely as possible. It is particularly important to prove that specific contract negotiations have already taken place with customers to substantiate any claims against the influencer. Regular status meetings and reports can be helpful in this regard.
Overall, it is clear that agencies can improve their position by drafting contracts carefully. However, risks remain due to legal uncertainties. In the event of a dispute, it will often be necessary to weigh the circumstances of the individual case. An agency is therefore advised not only to rely on contractual protection but also to minimize the risk of an influencer's premature exit from the outset through good cooperation and fair terms and conditions.
Effectiveness of Post-Contractual Commission Clauses
For post-contractual commission clauses, also known as sunset clauses, to be effective, they must meet various requirements. First, they may only refer to contracts specifically brokered by the agency. A blanket inclusion of all the influencer's income would be disproportionate and therefore ineffective.
Furthermore, sunset clauses must be limited in terms of time and amount. As a rule of thumb, they should provide for a maximum commission of 25% for a period of one to three years after the end of the contract. Higher commissions or longer terms would put the influencer at an unreasonable disadvantage.
Finally, it is important that the clauses are negotiated individually between the parties. Pre-formulated contractual provisions that management unilaterally imposes on the influencer risk being invalid as surprising or inappropriate clauses. In the event of a dispute, courts would scrutinize whether the influencer had the opportunity to influence the clause's content.
If a post-contractual commission agreement does not meet these requirements, it is invalid. The influencer would then not be bound by the clause and could terminate the contract without having to continue making payments to the agency. The exact wording of sunset clauses therefore requires legal finesse. If in doubt, agencies should seek legal advice to avoid unpleasant surprises.
Admissibility of Severance Clauses in Influencer Management Contracts
Severance clauses in influencer management contracts aim to regulate payments the influencer must make to the management in the event of premature contract termination. Such clauses can generally be effectively agreed upon, but they are subject to certain legal limits.
First, a distinction must be made between individually negotiated contracts and pre-formulated contractual provisions (General Terms and Conditions - GTC). Smaller influencers and agencies, in particular, often use standard contracts, which are then considered GTCs. These are subject to stricter content control according to Sections 305 et seq. BGB. Specifically, they must not unreasonably disadvantage the contractual partner (Section 307 BGB).
In the case of individually negotiated contracts, which are more common with well-known influencers and specialized management, there is more room for maneuver. However, the same principles must apply here as well. The severance clause must not excessively restrict the influencer's professional freedom.
There is a certain parallel to compensation claims in commercial agency agreements in accordance with Section 89b HGB. It is recognized there that claims of the commercial agent for post-contractual compensation can be waived or limited to a certain extent. However, this must also be measured against the principles of good faith (Section 242 BGB) and the protection of the weaker contracting party.
If these assessments are applied to influencer management contracts, a severance clause should be permissible if it:
- is reasonable in amount and does not place an excessive burden on the influencer,
- is limited in time, meaning it does not apply for life or for many years,
- provides for exceptions in cases where the influencer is not responsible for the termination of the contract.
Especially with pre-formulated contracts, it is also important that the clause is transparently and comprehensibly formulated. The influencer must be able to recognize the financial consequences of premature contract termination.
In summary, severance clauses in influencer management contracts are generally permissible but should be handled with caution. They must not be excessive and must ensure a fair balance of interests between the influencer and management. In the event of a dispute, it depends on the circumstances of the individual case. A blanket assessment is not possible. In case of doubt, both sides should seek legal advice to avoid unpleasant surprises.
Conclusion
Influencer management agencies face the challenge of securing their commission claims if an influencer prematurely switches to a competitor. Contractual provisions such as sunset clauses, post-contractual commission payments, or severance clauses can be useful instruments. However, they must be used with a sense of proportion and must not put the influencer at an unreasonable disadvantage.
Agencies often find themselves in uncertain legal territory regarding the specific wording of such clauses. There is little case law on these issues, meaning many details are disputed. Even with corresponding provisions in the contract, there is no guarantee that they can be enforced in the event of a dispute.
Moreover, the market reacts sensitively to overly restrictive contractual obligations. Influencers may hesitate to sign if they feel too limited. Long-term commission claims or high severance payments can also deter and reduce an agency's attractiveness.
Even if contractual provisions are effective, an agency must carefully consider whether it wants to enforce them in an emergency. Legal disputes are costly, lengthy, and uncertain in their outcome. It can often make more sense to try to reach an amicable agreement with the influencer than to take legal action.
In addition to legal protection, agencies should also implement operational measures to retain influencers long-term. Trust-based cooperation, attractive conditions, and professional support can reduce the willingness to switch. Clear communication of mutual expectations and careful selection of influencers also pay off.
As a lawyer, I am happy to advise agencies on the options for drafting contracts. This includes not just sunset clauses, post-contractual remuneration, or severance arrangements. Non-compete clauses, contractual penalty agreements, or confidentiality obligations can also be considered. An individual weighing of interests is always necessary.
Ultimately, even the best contract cannot prevent an agency change if the influencer is determined to do so. While entrepreneurial risk can be minimized, it can never be completely eliminated. My advice to agencies is therefore: protect yourself legally as best as possible, but focus at least as much on good cooperation with your influencers. This is the only way to build a successful, long-term partnership.