The sell-off rights to merchandise aren’t well known to all musicians. However, it is something you should be aware of before you start to work with a merchandiser.
What are sell-off rights?
This simply means that the merchandiser doesn’t have the right to manufacture more merchandise right before the contract is over. They can only sell what is left in stock. Most merchandiser will ask to sell it through retail outlets as it won’t be sold on concerts. The artist will get royalties of these pieces that get sold. There should be no question in that. Before you take this step, there are a few things you, as an artist, need to ask for.
Buy it Yourself
Before the merchandiser sells your merchandise after your contract has ended, he or she should give you the chance to buy the rest of your merchandise back. If you have merchandise that you only sold online, it could be a good idea to start selling that merchandise at concerts too. It gives your fans the chance of having that one shirt they couldn’t order.
If you don’t buy the rest of your merchandise, the merchandiser will get a sell-off period. This can be anywhere within 6 months to a year. Just make sure that the sell-off rights are non-exclusive, so that if you work with another merchandiser you won’t get in trouble. And, the merchandiser cannot stockpile the merchandise. This means that they can’t manufacture more merchandise right before the end of the term. If you’re making an agreement, try to get this in the contract. Ask that they only manufacture a specific amount of merchandise so that this doesn’t happen.
Distress Sales or Dumping
Ask them to put this in the contract too. This means that merchandisers cannot sell your merchandise at very low prices just to get rid of the stock.
If you do get a sell-off rights agreement, they should ask you by the end of the term if you want to buy the remaining stock. If not, you ask them to get rid of the merchandise. With this meaning, destroying it. Or you ask them to donate it to charity.