Foundry distribution agreement terms. Help wanted!

Kasper Pyndt

Hey TD community, 

I'm in conversation with a small/mid-sized type foundry about to distributing one of my typefaces. Before going ahead and signing an agreement with them, I have a few questions that I hope some of you with more experience could help me clear up. I know there's no normal in this business so bear with me. I'd be grateful if you'd just let me know what you would want or expect if you were in my shoes. 

Duration of the agreement
Should I make a limited (5 year?) agreement with the foundry for distributing my work? Or perhaps it would be fine to just make an unlimited distribution-period agreement that is possible to terminate at any time? Not sure what is to be preferred.

Royalties
I'll most likely be doing all the development and mastering myself. The foundry will do some quality checks and give feedback during the way. We've been discussing a 50/50 split. Do you think that sounds fair? 

Custom versions of the typeface for clients
If the foundry is contacted by a client in regards to modifying my typeface for the client to attain full exclusivity of a modified version, how'd you expect this to go about? I assume the foundry would be expected to contact me to execute the work on a rate paid by the client. I'd probably expect for myself to be paid that work-rate in full and for the foundry only to take a percentage of the payment for the exclusivity rights. What do you think?

For work that I'm unable to execute
What happens if the foundry wants to extend the type to another language, one that I can’t draw? Or they have a request to do something and I don’t have the time? What is the split, and who pays the fee to the person executing the work?

What happens if the foundry is sold?
... to another company (say Monotype). What happens to my distribution deal, is this purchased also? Where does that money go? How is it to be valued?

Is there any other questions I should be asking? Any other issues that need to be addressed in the agreement to make sure I'm covered?

Thanks so much for your help!
Kasper

Dominic Stanley

Congrats! These are good points and Im looking forward to seeing other people's responses and additions. Perhaps other considerations might include:

Will the foundry have exclusive rights to distribute it or can you also sell elsewhere?

Where will they sell it?

For % Royalties - on the profit or the sale price? (50% can be 25% if sold through Myfonts)

Ask them specifically what promotion they will do for the font - its not always great 

I think you can try to ensure that you are always offered first refusal on any expansion work on the font 

Thomas Phinney

If it was me, I would feel that an indefinite time period, with auto-renewal unless canceled, that either party can cancel (potentially after some period of time), is a good thing. Otherwise you have to remember to re-up your agreement every N years.

50/50 is a normal to quite good split these days. Better than the Big Biz orgs are offering.

If the foundry is sold, typically the contracts go with it. This should be spelled out in the contract. For folks who have strong feelings about some particular likely purchaser, this might be a bad thing. I would personally want to have a clause which says that while the contract is transferable to a successor company, I have to be notified and have some amount of time (a month or two) to immediately cancel the contract.

The value of your distribution deal to the foundry and/or to somebody who purchases the foundry is ultimately not something you are likely to know. Unless this is a different kind of deal than I am expecting, you are not becoming a shareholder of the company and won’t likely get that sort of information.

Kasper Pyndt

@Dominic Stanley Thank you for your response! The conversations I've had with the foundry revolved around them being the sole distributor of the typeface.

@Thomas Phinney Ah, thanks for the elaboration. If the contract is an "opt out anytime!" type of contract, I guess it doesn't matter so much if the foundry is sold, seeing as the contract wouldn't be made void. But I'll definitely ask them to spell that out in the agreement.

Thomas Phinney

Yes. Indeed, I would go further and say that as long as you have the option to opt out at any time, I don’t think it is in your interest to have the contract automatically canceled if/when the foundry is acquired.

Christopher Slye

In my experience it’s somewhat rare for a distribution agreement to have an open-ended opt-out clause, and I think it’s reasonable to give a distributor some measure of predictability. It might be more reasonable to ask for a clause that says words to the effect of: “If the company is sold, the contract is automatically terminated.”

With the two font distributors I’ve been in control of, my philosophy has generally been “If a foundry partner wants out, let them out.” (There has been an exception or two.) This was my personal thing so I wouldn’t say you should expect it from anyone else, but you might find you have the option even if it’s not explicit in the contract terms. (Having said that, a company being bought is just the kind of scenario where you might hear “Sorry, we can’t make an exception for you.”)

In any case, I certainly wouldn’t recommend signing an agreement that has a very long (or infinite!) term. You might very well experience a multi-year initial term and then a one-year auto-renewing term after that. That seems pretty reasonable and normal to me.

Don’t be afraid to ask for changes. You might be turned down, but nothing ventured, nothing gained.