Influencer management: Drafting contracts when influencers change agencies

Influencer management: Drafting contracts when influencers change agencies

A common problem in influencer management that which I as a lawyerlawyer I am often confronted withtion is the change of an influencerto another agency while contract contract negotiations with ongoing with clients who the originalthe original managementhas suspected. Many me iner clients from the agency sector fask me how they protect themselves fromcan protect themselves, in such caseseer and not receiving commissions for their work.

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Nevertheless in this article I would like toou can point out some possibilities, how agencies cancontractual precautionscan take in order to at least a at least to some extentto ensure this. Because even when there is no patent solution: If you have the typicaltypical pitfallsricks andd the contracts scarefullycontracts, you are already one one step further.

Contractual regulations on changing agencies

Cases in which influencer management contracts are deliberately terminated in order to “take away” ongoing contract negotiations and save commissions are problematic. This raises the question of what claims the agency is entitled to.

In principle, such premature termination of the contract may constitute a breach of contract. The agency would then possibly have claims for damages under §§ 280 ff. BGB for breach of contractual duties to protect. However, it may often be difficult to prove specific damage and fault on the part of the influencer.

To make matters worse, there is hardly any case law on this constellation. In the absence of clear rulings, there is considerable legal uncertainty regarding the enforceability of any claims. This makes clear contractual agreements all the more important in order to avoid disputes from the outset.

In particular, contractual penalties in the event of a premature exit of the influencer in breach of contract can be considered here. By agreeing a contractual penalty, the agency would not have to prove any 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 in the exercise of their profession. In any case, 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. In particular, it is important to prove that specific contract negotiations have already taken place with customers in order to substantiate any claims against the influencer. Regular status meetings and reports can also be helpful here.

Overall, it is clear that the agency can improve its position by drafting contracts carefully. However, risks remain due to the legal uncertainties. In the event of a dispute, it will often be necessary to weigh up 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 of all, they may only refer to contracts that were specifically brokered by the agency. A blanket inclusion of all of the influencer’s income would be disproportionate and therefore ineffective.

In addition, sunset clauses must be limited in terms of time and money. 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 the management unilaterally imposes on the influencer run the risk of being invalid as surprising or inappropriate clauses. In the event of a dispute, the courts would examine very closely whether the influencer had the opportunity to influence the content of the clause.

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 on this to avoid any nasty surprises.

Admissibility of severance clauses in influencer management contracts

Severance clauses in influencer management contracts are intended to regulate what payments the influencer must make to the management in the event of premature termination of the contract. Such clauses can generally be effectively agreed, but are subject to certain legal limits.

First of all, a distinction must be made between individually negotiated contracts and pre-formulated contractual provisions (GTC). Smaller influencers and agencies in particular often use standard contracts, which are then to be regarded as GTCs. These are subject to stricter content control in accordance with Sections 305 et seq. BGB. In particular, 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 also be applied here. The severance clause must not lead to an excessive restriction of 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, i.e. 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.

With pre-formulated contracts in particular, it is also important that the clause is formulated transparently and comprehensibly. The influencer must be able to recognize the financial consequences of a premature termination of the contract.

In summary, it can be said that severance clauses in influencer management contracts are generally permissible, but should be treated 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 are faced with the challenge of securing their commission claims in the event that an influencer moves to a competitor prematurely. Contractual provisions such as sunset clauses, post-contractual commission payments or severance clauses can be useful instruments here. 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 when it comes to the specific wording of such clauses. There is little case law on these issues, meaning that many details are disputed. Even if corresponding provisions are included in the contract, there is no guarantee that they can be enforced in the event of a dispute.

In addition, the market reacts sensitively to contractual obligations that go too far. Influencers may shy away from signing if they feel too restricted. Long-term commission claims or high severance payments can also act as a deterrent and reduce the attractiveness of an agency.

Even if the contractual provisions are effective, an agency must consider carefully whether it wants to enforce them in the event of 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 therefore also take operational measures to retain influencers in the long term. Cooperation based on trust, 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 is not just about sunset clauses, post-contractual remuneration or severance arrangements. Non-compete clauses, contractual penalty agreements or confidentiality obligations can also come into consideration. An individual weighing of interests is always necessary.

Ultimately, however, even the best contract cannot prevent a change of agency if the influencer absolutely wants to. Although the entrepreneurial risk can be minimized, it can never be completely ruled out. 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.