Fashion Contracts 101: Part 1 of 3
So you wanna build a fashion brand eh? Whether you just graduated from design school or are
pursuing fashion as a second career, the only way to spread your brand is by understanding the
business. And what do smart business people do, you ask? They plan ahead. They obsessively study their market and account for potential bumps in the road. Those in the fashion Industry know that in this global world a handshake deal no longer carries the weight it once did.
Today, we see businesses live or die by the pen, which is why the mantra we repeat for our
fashion industry clients is simply, “Get it in writing.” In this first of a three part series, we introduce you to some critical fashion contracts that increase the likelihood that you will get paid and protect you from liability.
GETTING IT MADE
Manufacturing Agreement
This is a contract between a designer or a company that has developed a product, such as an article of clothing, accessory, or footwear, and a manufacturer. A Manufacturing Agreement often includes the following terms: quantity, shipment, payment, delivery dates, product specifications (quality), manufacturer’s knowhow, ownership of intellectual property, and the liability of the parties.
Private Label / White Label Manufacturers
Where manufacturing budgets are tight, some newer apparel and accessories companies today rely on a private label or white label manufacturers. Here, a product is manufactured by one company and is rebranded by a fashion company. This drastically reduces the time and energy spent on design. Agreements with private label or white label manufacturers often includes the following terms: quantity, price, payment options, quality assurance, right to sell under specified trademark, and liability of the parties. (Proper licensing of trademarks is one of the keys to a successful arrangement with private and white label manufacturers. More on this in Part 2 of 3.)
GETTING IT OUT
Consignment Agreement
This is a contract between a retailer and a designer whereby the retailer grants the designer the right to sell certain merchandise at its retail outlet for a specified period of time. A Consignment Agreement often includes the following terms: duration of the agreement, terms of sale of the products, the percentage that each party will receive, payment options, liability for lost or damaged goods, and the effect of nonsale. Typically, all unsold merchandise is returned to the designer.
Showroom Agreement
This is a contract between a showroom and a designer whereby the
showroom provides the designer a space in the showroom to display his/her line. The showroom is responsible for introducing the designer’s line to its new and existing buyers and then passing along orders, contracts, and shipping details to the designer. A Showroom Agreement often includes the following terms: payment options, duration of the agreement, space assignment, commissions, obligations of the showroom, and liability for lost or damaged goods. To house and market a line, a showroom may charge a flat fee, take a commission, or a combination of both.
Independent Sales Representative Agreement
Similar to a Showroom Agreement, this is a contract between a designer and a sales representative (“Rep”) whereby the Rep is responsible for introducing the designer’s line to its new and existing buyers and then passing along orders, contracts, and shipping details to the designer. An Independent Sales Representative Agreement often includes the following terms: duration of the agreement, obligations of the Rep, territories/products covered, commissions/advances, trade room/tradeshow fees, termination notice, and percentage guarantees on orders placed.
Ready to protect your business and get paid? Contact TFLG within the next 5 days for a free consultation.
