"Legal Issues Companies Must Verify When Terminating Exclusive Model Contracts"

Law firm Veat received a request from Entertainment Company A (hereinafter referred to as "the client") to provide legal advice regarding the termination of an exclusive model contract.

​The client had entered into a joint brand contract with a specific brand, and subsequently entered into a separate exclusive model contract with that brand. However, due to business needs, the client hoped to mutually terminate the joint brand contract, and it was necessary to review matters such as the usage period of deliverables and model fees arising from the termination of the exclusive model contract.

​In the entertainment industry, exclusive model contracts with brands are an important element of a company's marketing strategy. However, circumstances may arise where an exclusive model contract must be terminated, and in such situations, a legal review to prevent unnecessary issues is essential.

Mutual termination of a joint brand contract

Unlike a simple exclusive model contract, a joint brand contract includes additional legal issues such as profit sharing and brand usage rights. When reviewing mutual termination, it is possible to terminate the contract if certain conditions are met by analyzing the termination clause in the contract. Also, determining the appropriate time for contract termination can prevent unnecessary legal disputes.

​Especially, when a joint brand contract exists, the termination of an exclusive model contract may be affected by whether the joint brand contract is terminated, so it is necessary to comprehensively review both contracts and proceed with the termination process. Generally, proceeding with the termination process through amicable consultation with the model is the most desirable approach, and if mutual termination is difficult, the contract can be terminated based on the termination clause specified in the contract.

Usage period of deliverables and model fee payment

When an exclusive model contract is terminated, the usage period of previously produced advertisements or promotional materials can be a key issue. It is necessary to confirm whether the contract specifies when the deliverables can be used, which is also related to the model's right of publicity and publicity rights. Therefore, it is necessary to confirm whether the usage of deliverables is possible after the termination of the contract and prepare corresponding legal countermeasures.

​Also, if the exclusive model contract includes a minimum guarantee, there is an obligation to pay a certain level of model fee even after the contract is terminated. It is important to prepare specific payment plans to ensure that the company complies with its legal obligations and terminates the contract smoothly by reviewing the model fee payment conditions specified in the contract.

* What is a Minimum Guarantee (Minimum Guarantee)?

A minimum guarantee means the minimum compensation guaranteed to a model during the contract period. In an exclusive model contract, a company enters into a contract to exclusively use the model’s image and publicity rights for a certain period, and this is the minimum compensation for that. From the company's perspective, this is a marketing expense that is fixed regardless of the number of advertising shoots, and the contract may include additional incentives based on the number of advertising exposures or product sales in addition to the minimum guarantee.

Law firm Veat thoroughly reviewed the termination process for exclusive model contracts with entertainment companies through this case study and presented ways to minimize legal risks. Moving forward, Law firm Veat will continue to provide expert legal advice on various entertainment legal issues to help clients effectively resolve legal problems.

​If you require legal advice related to entertainment operations, such as termination of exclusive brand contracts, model fee payment and settlement, please feel free to contact Law firm Veat.

This case study can also be viewed on the Law firm Veat blog.

- Legal issues to be confirmed by a company when terminating an exclusive model contract

​Thank you.

Law firm Veat