Group Partnership
by Ben McLane, Esq.
When a band forms, the usual intention is to become a successful recording and/or
touring act and to make a profit. To accomplish this collective goal, the individual
members contribute their time, talents and money. In essence, there is an implied
partnership agreement between the band members. When most people go into business
together, there is an official written partnership agreement. However, the majority
of bands - including many who are best selling acts - have never formalized their
relationship. Often this can lead to expensive litigation when a band breaks up
or a member leaves because there exists a question as to how profits are to be
split, or who actually owns the group name. This being the case, bands should
be encouraged to enter into a simple partnership agreement early on when everyone
is getting along. This article will briefly explain the contents of a basic
partnership agreement.
First, there needs to be a name for the partnership. Generally, this will be the
name of the band.
Second, there needs to be an official location selected as the place of business.
A band member's address will do.
Third, the complete name and address of each partner must be specified.
Fourth, ownership of the group name must be discussed. Normally, the group as
a unit owns the name and a majority of the members performing together can use the
name. The common problem which arises is when a member leaves the band and feels
that he or she has the right to perform under that name. A situation such as this
needs to be addressed in the agreement.
Fifth, profit splits are very important. In most cases an equal percentage of
the net profits (i.e., after expenses) as well an equal division of any losses is the
most equitable approach. The splits can be different, however, if certain members
contribute more than others (such as songwriting, etc.).
Sixth, leaving member issues need to be anticipated. A way of handling this
would be to allow a leaving member to receive the same percentage for activities he
or she participated in before departing, but no percentage for any future activities
of the group.
Seventh, voting is also crucial to any partnership agreement. It is probably
best to provide that any band decisions - such as hiring or firing a new member, buying
a piece of equipment, etc. - be approved by a majority vote. If there is a deadlock
situation, this can be overcome by a third party vote (such as a manager) or by a
coin flip.
Finally, every member of the group would need to sign and date the agreement.
As explained above, this is merely a guideline for some provisions that should be in
a band partnership agreement. Obviously, each group situation is different and may
require additional - and perhaps more complicated - terms. Although a partnership
agreement might seem unnecessary when everyone is friendly and there is no money
being made, if the band considers it to be like an insurance policy to prevent
possible future disagreements, it can certainly make any transition in the group
happen much smoother and without the threat of a lawsuit.
Copyright 1998, Ben McLane
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