Expert Advice When You Need It Most

When discussing mass production with a potential client what legally needs to be addressed?

Hello to all! I own a small cosmetic’s home based business, and have a client who wants me to feature her in a portion of my product line. I need to know when discussing mass production with a client what legally needs to be addressed?

And do you think it is wise to produce these goods without the client paying some portion of the manufacturing cost up front? PS, she is my first famous client , linking up with each other is intended to bring us both exposure...thus being the pay off for us both. However, funds are needed to even start this project up. Is it up to me to pay for this??! Pleasssse HELPPppp

Save

Attorney answers (2)

Reputation Level 20
Remember, that the primary reason business fail is that they are not adequately capitalized.
So, you need to carefully assess your cash needs to produce these goods and to fulfill orders as they come due. You need your cash in place before doing anything. You need to overestimate your cash needs because it is only an estamate here and things can change real fast.
As far as you paying for this, it sounds like this is a joint venture. You need to know that your partner (famous or not) is serious. The only way to determine this is to have that partner contribute capital to the venture. If she will not do so, then you should rethink this venture.

In any event, you need to think about some sort of agreement to set out your understanding.
This is absolutely essential, if you want to avoid headaches and lawsuits and minimize
trouble down the road.

Hope this helps.

LEGAL DISCLAIMER
Mr. Fromm is licensed to practice law in PA with offices in Philadelphia County. He can be reached at 215-735-2336. He has just been named in an independent survey as a 5Star Wealth Manager in the November issue of Philadelphia Magazine. The response herein is not legal advice and does not create an attorney/ client relationship. The response is only in the form of legal education and is intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received.
By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question.
Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.

Reputation Level 9
This sounds like a very exciting step for you and your business and some of the decisions you make will have an impact for quite a while. You said "linking up with each other is intended to bring us both exposure." Perhaps the more important question is what is the value of each person's contribution and how will you each be compensated for their contribution?

Will the increase in exposure for your friend be enough compensation or does she expect to also receive a share of the business?

How much is the business worth now and how much to you expect the endorsement to increase the value of the business?

How much of your business are you comfortable giving up in exchange for your friend's endorsement without a contribution to to the costs of mass production? How much does she expect?

If additional capital is going to be required for the growth of the business, what is a reasonable return on that investment?

Some of the answers are matters of judgment and may be affected by the relative positions of the parties. I hope this gives you a start on what to talk about.

DISCLAIMER - Mr. Wilson is licensed to practice in the State of Texas and is not certified by the Texas Board of Legal Specialization. The foregoing information is educational and informational purposes and does not constitute legal advice. No attorney client relationship is created or implied by answering questions on Avvo.com.

Can't find what you're looking for? Ask a Lawyer

Get free answers from experienced attorneys.

 
Ask now