The importance of sponsorship agreements: Protecting your brand in a competitive landscape
In today’s competitive landscape, sponsorships offer valuable opportunities to enhance brand visibility and reach new audiences. However, to maximise the benefits and minimise risks, a well-crafted sponsorship agreement is essential. This article explores the key elements of a successful sponsorship agreement, providing insights to help you protect your brand and ensure a fruitful partnership with Miranda Punter, our associate solicitor in the commercial team.
Amid international sporting events, where sponsorships are prominently featured and meticulously controlled, we are reminded that a well-drafted sponsorship agreement cannot be overstated.
Understanding sponsorship agreements
A sponsorship agreement is a legally binding contract between a sponsor and a sponsored entity. It sets out the terms upon which the sponsor provides financial or other support in exchange for promotional benefits. These benefits can include branding opportunities, exposure at events, and various forms of marketing collateral.
Why a sponsorship agreement is crucial
While a verbal agreement might seem sufficient, a written contract provides several advantages, not only from a legal perspective but also from a practical point of view, to manage the relationship between your company and the other party smoothly.
1. Brand protection and integrity
One of the foremost reasons for having a sponsorship agreement is to protect the integrity of your brand. When providing sponsorship, your brand’s image and reputation are closely linked with the sponsored party and vice versa. Without a formal agreement and set out terms, there is a risk that the other party may not uphold the standards you expect, or external circumstances arise which affect your brand and you may have little or no right to recourse. This could occur, for instance, if you sponsor an event and the other party engages in activities that are inconsistent with your brand values or become embroiled in controversy. This could severely damage your brand’s reputation.
Whilst some circumstances may not be possible to prevent, a well-drafted sponsorship agreement can help you mitigate the risk of damage to your brand. It can also set out the consequences you want in place in the event of any misuse of your brand or where external circumstances impact your brand’s reputation.
By clearly defining these parameters, you can take appropriate steps to safeguard your valuable intellectual property, and your brand’s image and ensure it remains aligned with your core values.
2. Clarifying roles and responsibilities
Sponsorship agreements also play a pivotal role in clarifying the roles and responsibilities of both parties. Clear delineation of responsibilities helps avoid misunderstandings and ensures that both parties are on the same page regarding each of your respective commitments. For example, if a sponsor is providing funding for an event, the agreement should specify the exact branding to be used at the event, any brand guidelines that should be followed and/or the approvals process to follow. As well as how the sponsor’s branding will be integrated into event materials by the sponsored party, such as creating a digital presence, banners or programs at the event itself, and event promotion more widely, such as social media posts or press releases.
This level of detail ensures that both parties understand their obligations and can work together effectively to achieve the desired outcomes.
3. Managing expectations
A sponsorship agreement can be instrumental in managing expectations. It sets out the agreed-upon benefits and deliverables for both parties, providing a roadmap for the partnership. This includes details about the level of exposure the sponsor will receive, the duration of the sponsorship, and any exclusivity rights.
By clearly defining these aspects, the agreement can help to prevent disputes from arising and ensure that both you and the other party have a mutual understanding of what to expect from the partnership. For instance, if it is agreed that a sponsor can expect exclusive branding rights, the agreement should specify that no other competing brands will be associated with the sponsored event or entity.
Managing expectations upfront helps build a positive working relationship and fosters trust between you and the other party.
4. Mitigating risks
Sponsorship agreements are also crucial for risk management. They can address potential risks, such as reputational risks and liabilities, that may arise during the course of the partnership.
The agreement should therefore outline the process for resolving disputes and handling breaches of contract.
5. Enhancing sponsorship effectiveness
A sponsorship agreement can enhance the effectiveness of the sponsorship by providing a clear framework for measuring success. By setting measurable goals and benchmarks, the agreement helps both parties evaluate the effectiveness of the sponsorship and make any necessary adjustments.
This data-driven approach ensures that the sponsorship delivers tangible benefits and aligns with your objectives.
6. Legal compliance
Sponsorship arrangements must comply with relevant laws and regulations, such as advertising standards, data protection laws, and any industry-specific regulations. A well-crafted agreement can provide clarity to you and the other party in respect of your obligations. For example, if the sponsorship involves collecting personal data from event attendees, the agreement should include provisions related to data protection and privacy and compliance with regulations such as the General Data Protection Regulation. Ensuring such compliance helps avoid potential issues and reinforces the professionalism of the sponsorship arrangement.
Hansells: key elements of a sponsorship agreement
At Hansells, we will help you consider the key elements specific to your deal. For example, if the sponsorship arrangements are sports-related, will you want any rights in the following scenarios:
- where an athlete’s social media posts are inappropriate and/or there is any inappropriate conduct off “the playing field”?; and/or
- circumstances where an athlete appears to be taking performance-enhancing drugs or could be involved in things like the “ball-tampering scandal”?
Conclusion
In the competitive landscape of brand promotion and sponsorship, having a well-drafted sponsorship agreement is essential for protecting your brand and ensuring a successful partnership.
If you are considering entering into a sponsorship arrangement, we encourage you to seek expert legal advice to ensure that your agreement is tailored to your needs and provides the protection and benefits you require.
At Hansells, we are committed to helping businesses navigate the complexities of sponsorship agreements and achieve their branding and promotional goals. By helping you address the key aspects of your sponsorship, we can support you in creating a clear and effective framework for collaboration between you and the other party.
For further assistance and to discuss your sponsorship needs, contact Miranda Punter in our Commercial Team, who has experience drafting and reviewing high-profile sponsorship agreements and will be happy to help your business.
