Corporate Sponsorship Agreement

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Corporate Sponsorship Agreement

A Brief Introduction of Corporate Sponsorship Agreement

A sponsorship agreement is entered into between two parties, one of whom wants to promote their product or service by sponsoring a particular event. The sponsee needs to ensure that the sponsor gets the visibility they require. Sponsorships help the sponsee organize events by covering most of the costs of the event. The spectators at the event, in turn, are able to watch a popular event at an affordable cost and become patrons of the brand sponsoring the event.

The sponsor will be interested in the event that attracts the specific demographic profile that they want to target. The advertising model is also clearly specified in the agreement. It could be the type of branded food that the spectators might associate with the event, fliers, and other types of promotional material. The payment schedule, according to which the sponsor will make the payment, including the number of installments and the due dates for each installment.

Payment to the sponsee will depend on whether they have fulfilled their contractual obligations according to the satisfaction of the sponsor. Failure to do so will result in non-payment and termination of the agreement by the sponsor. The agreement will also include any products being provided by the sponsor for promotion.

Who Takes the Corporate Sponsorship Agreement?

When an organization wants to hold an event but does not have sufficient funds to cover all the charges, they look for a sponsor to help them financially. The sponsor agrees to cover certain costs provided they gain mileage from the event.

Purpose of the Corporate Sponsorship Agreement

Corporate sponsorship needs defined roles and responsibilities for successful execution. A well-planned sponsorship agreement provides the right marketing tools to connect with the right brands to improve your engagement with your audience. It also helps in building connections with the fans and audience while conveying to the donors the nature of the work you’re doing. Sponsorships, as a way of funding, provide credibility and validate the company’s management strategies which can help in community outreach and exposure. It also defines the obligations that you have to manage your sponsor expectations for leveraging this relationship for their own sales.

Contents of the Corporate Sponsorship Agreement

The contents of a sponsorship agreement can be found in a corporate sponsorship agreement sample. Here is the information included:

  • The effective date of the agreement
  • The names of the sponsor and the sponsee
  • The duration of the agreement
  • Compensation payable by the sponsor for getting permission to display logos and use other promotional material during the event
  • It is the duty of the sponsee to promote the sponsor in the way mentioned
  • The type and number of products being used for promotion
  • The payment schedule, the total number of installments, the due date and penalty for delayed payment

How to Draft the Corporate Sponsorship Agreement?

You can refer to a corporate sponsorship agreement template while drafting a sponsorship agreement. Here are the points you need to consider:

  • The nature of exclusivity that the sponsors require in their engagement based on the kind of sponsorship they offer you
  • The kind of payments that should be received along with the obligations of taxes, fees and other receipts. If the payments are in instalments, the schedule of payment of such instalments.
  • How termination of agreement should be handled, and if any pending payments are receivable, the nature of such transactions should be discussed.
  • If any IP or intangible assets are involved, then the usage rights of such assets should be discussed.
  • The nature of products and services that would be offered as part of the sponsorship, and the description of such products or services.

Negotiation Strategy

Negotiating the terms of a corporate sponsorship agreement must be completed before the agreement is signed. The sponsor may draft the agreement and share it with the sponsee. The sponsee should make a counteroffer. When both parties agree to all the clauses, the agreement should be signed.

Benefits & Drawbacks of the Corporate Sponsorship Agreement

Benefits

  • Protection of interest: The sponsor is aware that they will get the required mileage for the event. The sponsee knows that they will be paid provided they carry out the requirements of the sponsor
  • Mutual benefits: The sponsor is able to reach out to the target audience, and the sponsee can organize events since funding is no longer a problem
  • Legal action: The injured party can take legal action
  • Termination of contract: You can exit the contract by providing notice

Drawbacks

  • No legal remedy: In case of violation of the contract by one party, the other party cannot take legal action
  • No party has any contractual obligation

What Happens In Case of Violation?

In the case of a violation of a corporate sponsorship agreement, there are legal remedies available. If there is a total or partial breach of the contract, the injured party can claim money damages,  including loss of profits.

Restitution(1) or restoring the injured party to the original position before the contract happens if one party is incompetent. If fraud is involved, then either the contract is canceled under rescission or a new contract drafted under reformation.

In the case of specific performance, the party violating the contract has to fulfill their contractual obligation, and money damages are unacceptable.

In case of this agreement, both the sponsor and the sponsee should incorporate all clauses required to protect them. Clauses like the dispute resolution clause and confidentiality clause and the termination clause are mandatory. Both parties should read all the terms and conditions before signing it.