Disclaimer: The aim of this article is information and enlightenment; please consult a solicitor for individual professional advice.
ME, MY GROUP AND I (PART 2)
A little while ago, we started talking about the business of musical groups/bands/duos and we discussed the merits of forming a profit making association to make things professional, satisfactory and generally tidy. Among the things we identified as important to note in a Shareholders' Agreement, we singled out the issue of a group's name as deserving of its own entry because of its pivotal role as the money making tool of the group.
Now, I won't begin to explain the importance of a good name. Forget that it's better than riches, here, it is the riches. You will not believe the pains people go through in naming their business. Everyone knows that a good name is it. It has to sound right. It has to hit you and not get lost in the crowd out there. It must stand out. Personally, I understand when I hear seemingly sane people call their businesses names like 'Coco-Bracada-Merlina'. I mean, diss it all you want, but you don't forget a name like that easily. It usually gets your attention and keeps it. As the brand behind the success and the cash, the group’s name is so important. It is the brand that draws crowds at a show. It is what makes fans buy a CD or merchandise. It is everything in any business, and more so in music business.
Now, imagine the situation of Coco-Bracada, a hypothetical group of four girls (Lily, Rose, Hibiscus and Cactus). They've become so popular even the President dances to their songs. Then, one bright, flowery morning, Hibiscus decides that Rose is too proud and Cactus is too prickly and temperamental and that she does not want to have anything to do with them. So, she and gentle girl Lily form a new group and call it Coco-Bracada, hoping to use the already established name/brand to the advantage of their new group.
Or another situation: Cactus decides that she was the one that came up with such a wonderful successful name which was given to her in a dream. And so, she wants a larger share of the profits earned from the name, even though all she does is back up the lead vocalist.
These are just two of many squabbles which can arise with regards to a name if care is not taken. Still working with that Shareholders' Agreement we started last time, here are a few tips:
1. The agreement should transfer the ownership of the group's name/brand to the company, who as we mentioned before is a separate person under the law. Nothing stops the group members from agreeing that they all own the name. However, a neat and wise way to tidy it is to make the company the brand-owner.
2. The agreement should specify very clearly what happens when one of the members want to leave the group. The best thing to do would be to agree that when such a situation arises, the leaving member will forfeit all rights to the use of the name without the consent of the company. There should be a fair clause that allows the leaving member's interest to be bought out.
3. The shareholders' agreement may make a leaving member entitled to the profits that are derived from the name up to the point when he/she leaves; after all, he/she helped to make that particular money.
4. In a situation where one of the members came up with the group's name, then it may be best to compensate him/her for the 'inspiration'. It should be deemed that this member absolutely sold/assigned the name/brand to the company and compensation should be agreed upon. Lest he/she starts demanding for a greater share of profits.
5. As soon as a name is determined, it becomes a veritable brand deserving of trade/service registration. Even though there is some level of protection for unregistered brands, it's better, in the long run for the name/brand to be registered.
Obviously, I can't tell you everything, but I have tried to help you watch your back.
Merry Christmas. See you in January 2011.
© 2010 Tinukemi Alabi
Comments/Questions: tinukemi@gmail.com
