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This question was posted by Max on the Dobizo Answers page. If you would like ANY question answered by me personally post it to the Dobizo Answers page and I will answer it ASAP or point you in the direction of the correct articles.

Max:

“I wonder if you can help? I?m starting a small label but i?m not a
designer, more a business bod that does the hard selling, back end stuff and
a bit of creative marketing every once in a while. I have defined my
concept, personality and route to market in addition to finding a designer.
Now my question is, how do we protect one another? I.e. Do we need to draw
up some kind of official agreement that says I require you to design x
number of pieces within my concept, and in return you will receive a
percentage commission on every garment sold etc, etc.
Any advice would be greatly appreciated. “

Hey Max I think you should make this decision yourself, because only you know what you want out of your business in the long run. You should take the aspects of your long term goals into hand when deciding on what to do about compensation and what types of benefits to offer to your potential designer-partner. The easiest way since they will be doing half the work is to offer them 50% ownership, but if your long term goal doesn’t reflect giving up half the ownership of your clothing company than we know that is out of the question.

If you’re going to offer a designer percentages or commission you might as well work with a few part-time freelancers or a design firm like Design Source Studios for now until your company has grown and you need a full-time design team.

You do need to draw up a binding contract no matter what you decide upon, because you don’t want either one of you to have disagreements in the long run that will cause confusion on what you originally agreed upon.

Also here are a few articles that I think pertain to your situation:

Designer Entrepreneur vs. Business Entrepreneur

Equity and Debt Financing Pros and Cons When Looking for a Potential Partner or an Investor

Partnerships in business: (Families and Friends) Part 1

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