Legal Issues Associated with Groups Passman, Ch. 22 Halloran, Pages 2-24 Internal Group Agreements What Does That Mean? An agreement between individual group members that addresses how they will manage they?re business and assets But we?re all BFF! group name legal structure (LLC, corp. etc) record deal key members leaving members deficits splits and control (who Is making business decisions) assets and buyouts other group legal issues Internal Group Agreements We?ll Do It Later. We?re Busy! the time to do the contract its now, when everyone gets along. It is easy when everyone is friendly saves the group a lot of money because it prevents lawsuits/ litigation and bad feelings Legal Ethics each individual should have their own attorney lawyer can act as a secretary Group Name Most Valuable Asset the group name, the rights to a group name come from using it not registering it Record companies requires a guarantee that they can use the bands name for promo with no legal issues Researching the name Why? Want to get it right up front not later go online and research territory, research internationally Group Name Registration, Trademarks, Servicemarks register as a trademark or servicemark get a domain name, just doing that doesn?t offer you any protection . Establishes a date, and that you are using the name. no such thing as a 100% protection, need to choose the most important places to have protection all could cost up to 250,000 Watch for infringements Group Name If Someone Leaves the Group? who gets to use and keep the name if it goes to court, the courts are interested in two things, what or who is the essence of the group and is the public being defrauded or deceived by someone using this name Note - Solutions Include (there are many others!): there is no one solution unless you make an agreement in the group. Nobody can use it, the majority can use the name, only the singer/ front person can use it, main songwriter or founder can use the name. Any two people in combo can use the name. Legal Structure Sole Proprietorship Partnership: LLC Corporations Legal Structure Sole Proprietorship DBA (doing business as) factious name permit. One person owns it. Unlimited liability. Partnership each may act on behalf of the partnership, which binds everyone all assets are liable, after the partnership assets are liquidated death dissolves a partnership general partners, all things are treated equal and limited partners, investor who has put money into it only liable for their investment, no decision making, not votes. Legal Structure LLC popular structure for music groups and companies governed by a written agreement same as a partnership as far as taxes go limited liability like a corp. Corporations ownership through shares of stock, it is its own entity, has a TIN (taxpayer insurance number) double taxation, what you make as a group and then getting taxed after it is received individually (dividend). how to get around it, claim it as salaries. no personal liability, piercing the corporate veil buy or sell shares annual min, tax payments The Record Deal Predict the Future! key members record companies rights to leaving members deficits Key Members ?A breach by one member is considered a breach by the entire group.? write what is called a key member clause, so only a breach by key members is a breach by entire group has to be asked for it be added to the contract (key member clause) political mind field, talk sooner rather than later different that a key man clause Company?s Rights to Leaving Members the record company has the rights to leaving members has the rights the remaining members also record label can terminate everyone leaving member deal is not as good as the original deal always spelled out in the original artist deal Deficits When a member leaves the group, what happens to the deficits and royalties? does the group recoup from the soloist royalties, vice versa the company asks for both in their standard form agreement, the record label will agree to pro rata (pro rated, divide up equally) Example: future deficits Money and Control some groups are owned by one or two people and the rest are helping hands new groups cant afford payroll %?s and splits. who gets how much? no hard fast rules control, who makes the decisions, does everyone have an equal say? Hiring and firing Buyouts What is that? What you talk about incase someone leaves or gets fired how are those assets valued? Other Issues Like?
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