Selling Your Craft
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The Business of Selling Crafts

Accepting Credit Cards at Craft Shows

Copyright Law for Crafters

Licensing Your Craft Designs

Insurance for Craft Business

Craft Show Press Release

Promoting Your Craft Business

Finances for Crafters

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Licensing Your Craft Designs

from The Crafts Report, by Barbara Brabec
Barbara Brabec is the author of several small-business books including "Creative Cash," "Handmade for Profit," and "The Crafts Business Answer Book."

Some craftspeople are earning thousands of dollars a year from royalties on products or designs they have licensed to manufacturers. Not everyone creates work that is suitable for licensing, but you might be sitting on a gold mine and don't know it. Those most likely to do well in this area are fine artists, craft and needlework designers, illustrators, photographers and others who create one-dimensional "illustrative work." Many 3-D craft objects, however, can also be mass-produced in resin or other mediums.

"It's hard to get out of the crafts production train of thought to consider licensing," says artist Annie Lang of Annie Things Possible. "To explore the possibilities in this field, you have to rethink what you're doing. To get an idea of the market potential for your designs or products, walk through a department store and look carefully at all the gift items and decorative accessories," she suggests. "Consider whether your designs would work on similar products and whether they would be adaptable to different surfaces."

Lang used to sell her artwork at fairs. Today, she has licensing arrangements with a number of manufacturers who have put her character drawings on all kinds of products. Her whimsical frogs, turtles, ladybugs, bumblebees and elves now appear on rubber stamps, giftware, resin castings and painted wood items manufactured by Westwater Industries; on iron-on transfers produced by Seitech-Cache Junction; on scrapbook papers produced by Hot-Off-The-Press; and on a line of fabrics manufactured by Balson-Erlanger.

"You have to think in terms of cross-marketing," Lang emphasizes. "The trend today is toward designs that can be used on a wide variety of products. In the near future, I expect to have my designs on other product lines such as buttons, rugs, towels, sheets and curtains."

Rip-offs or royalties?

Terry Floyd of Laughing Moon Productions has been selling hand-painted one-of-a-kind jumping jacks, clocks, gifts and decorative accessories for 30 years. As a purist who didn't want her products made in an inferior way, she rejected the first offer she got from a manufacturer who wanted to license one of her jumping jack designs.

"I was approached at a crafts show by a woman representing a manufacturer," she says. "Not knowing anything about how the licensing industry worked, I passed on the idea. She bought one of my jumping jacks, and I never thought anything more about it until I saw that item in the company's catalog. I never got a thing from it because I was ignorant about how to protect my rights in those days."

Later, when another manufacturer stole a different design, Floyd sued and won a $20,000 settlement. "I saw one of my designs at a show in the form of a lithograph," she says. "I had a [strong] case because I had hidden my signature in the art and they didn't see it."

In the end, Floyd decided it made more sense to get into licensing than to have her designs stolen by manufacturers. Although she knows she has lost a lot of money from rip-offs and contractual mistakes, she has nonetheless earned tens of thousands of dollars in royalties over the years from the sale of nearly 1,000 jumping jack designs. They have been used for Christmas ornaments and cross-stitch kits, on stationery, fabric, glass, beadwork and dishware.

How the licensing industry works

There are no standards in the licensing industry. Because each licensing agency and manufacturer operates differently, no two licensing deals are alike.

Some designers have agents who represent them to major manufacturers, but these agents are hard to find and may take as much as 50 percent of a designer's royalties. Thus, artists often negotiate their own contracts. This is not easy, however, and can be disastrous if you don't seek the advice of an attorney. "If you don't know what you are doing, there are a lot of [pitfalls] in this kind of arrangement," says one craftsman who made a bad licensing deal to have his handcrafted clocks reproduced.

"An attorney can negotiate a contract for you," says Floyd, "but lawyers tend to scare off small manufacturers, so you might want to negotiate these contracts yourself, using the attorney as a consultant."

Royalties are only part of the contract negotiations (see the sidebar). "You must understand the market potential for a product before you can successfully negotiate the terms of a contract and the percent of royalties that will be paid," says Lang.

Royalties normally range from two percent to 10 percent of net sales, with five to seven percent the most common. (The lower the retail price of the item, the lower the percentage is likely to be.) "Established designers may be able to command an upfront designer fee," Lang explains, "but beginners will be lucky to get a small advance of $250 to $500 against royalties that won't begin to materialize for a year or more." Once they start, however, payments are made monthly or quarterly, depending on the manufacturer's policy.

International Licensing Industry Merchandisers' Association
(Sponsors annual licensing show in New York)
350 5th Ave., Ste. 2309
New York, NY 10118
(212) 244-1944

Society of Craft Designers and Association of Crafts & Creative Industries (ACCI)
Box 3388
Zanesville, OH 43702-3388
(740) 452-4541
The Self Help Law Center on the Internet. The site is run by Nolo Press, publisher of legal advice books for consumers.

Finding and dealing with manufacturers

Terry Floyd found interested manufacturers by touring the L.A. Gift Mart. "I looked for companies that made high-quality products I thought my designs would work for and sent them my résumé, a catalog and my Web address," she says.

Annie Lang has sold her art designs to several manufacturers she found through networking and membership in professional organizations such as the Association of Crafts and Creative Industries (ACCI) and the Society of Craft Designers (SCD). SCD publishes a directory of its members and holds an annual conference in a different city each year. Here, designers showcase their work and negotiate directly with publishers and manufacturers in the crafts industry. "More and more manufacturers outside the craft industry are now coming to SCD conferences to find qualified craft designers," Lang notes.

You could also attend the international annual licensing show in New York but, "This is a monster show," says Lang. "Everything you can imagine is there -- all kinds of industries."

If a manufacturer expresses interest in your products or designs, check out the company carefully. You have to be able to trust the manufacturer because there is no way you can check how many products they make and sell using your designs. Since contact people change regularly, try to deal with the owner or someone high up on the ladder.

Ask the company to sign a proprietary rights or disclosure agreement that states they will merely look at your designs and not copy them. Sending your designs to the manufacturer without securing a signed disclosure agreements leaves you virtually unprotected. If a manufacturer is unwilling to sign a disclosure agreement, you might want to look elsewhere. If that company steals your designs, you have very little legal recourse. If a company signs your agreement then copies your work, you have grounds to sue.

Disclosure agreements vary, but should contain the following:

* a definition of what is and what isn't confidential information,
* obligations of the receiving party, and
* time periods.

If you take the necessary precautions and obtain legal advice, licensing to manufacturers can be a great way to boost your profits.


Copyright For Artists: Quick And Easy Copyright Protection.

Copyright For Artists Was Written By An Attorney And Jeweler for artists. Over 30 Pages, it Contains Specific Illustrations, Graphs, Links, Resources And Information For Artists About How To Protect Their Art And Craft designs. Review the E-book here.

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