Influencer Management Agreements: Fee (Manager's Compensation)

Our sixth minisode of season seven and the fifth part of our special series about Influencer Management Agreements is available today. In this minisode, Jon continues our review of influencer management agreements with a look at a manager’s compensation and the Fee section.

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A transcript of the episode follows:

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This is the sixth minisode of the seventh season of The Creative Influencer podcast.  Today we’re going to continue our review of influencer management agreements with a look at a manager’s compensation.

First and foremost, etch this cardinal rule into your mind: Never pay your manager upfront. Managers work on commission and shouldn't get paid until you get paid.

This leads to the obvious questions of how much and on what?

The “how much” is a percentage of your earnings that you negotiate with your manager. The range is 10% to 20% or more with 15% to 20% being the norm.

Typically, the agreement will read something like:

In consideration for Manager’s services developing and advising Influencer, the Influencer shall pay Manager a commission equal to 20% of all Gross Revenue with respect to any and all sponsorship contracts, engagements and agreements negotiated during the Term, or any subsequent Terms, directly or indirectly, upon any and all such engagements.

There are a couple of things to unpack here.

First, what I just read you is pretty Manager-sided. What I mean is those terms are more favorable to the Manager because it takes a percentage on “Gross Revenue” not “Net Income.” What does that mean?

Gross Revenue refers to the total revenue generated without any deductions. This means the Manager's cut is calculated before any expenses are subtracted.

In contrast, net income refers to the amount left after expenses have been deducted. If your agreement is framed around net income, the manager's percentage is calculated on the money remaining after paying expenses. This means that calculating the percentage on net income is much more favorable to an influencer.

Unfortunately for influencers, the industry standard is for managers to collect their commission on gross revenue.

Second, we need to think about the Scope of Earnings. It's vital to clearly outline what constitutes gross revenue. Is it only money made directly from brand deals? Or does it also include ancillary earnings from merchandising, appearances, or other media engagements? A well-drafted contract specifies the exact earnings subject to the commission.

How is the manager compensated during the term of the agreement? Is the compensation limited to active income versus passive income like AdSense?

Another thing to think about is compensation on non-cash deals. For example, what happens when an influencer is given a car to drive to Coachella?

Just like the percentage, these questions are negotiating points. Generally speaking, this is why you should have an attorney review and negotiate the deal on your behalf.

Finally, there’s the issue of Additional Fees and Expenses

This can be the devil in the details. Some contracts might include provisions that allow the manager to charge additional fees for specific services, such as travel or specialized promotional activities. Transparency and detailed negotiation are key to ensure that these fees don't turn into unexpected surprises.

Travel is a big one. Typical language in an agreement for an Influencer based in Los Angeles will be something like:

If Influencer requests the physical presence of Manager pursuant to any deals or employment regarding Entertainment Activities under this agreement, any travel expenses incurred by Manager outside Los Angeles County shall be reimbursed by Influencer.  Travel expenses shall include mileage (at current IRS rate), hotel, airfare, car rental or car service.

Two points out about what I just read. First, the term “Entertainment Activities” is something we’ve discussed in previous sections of the Management Agreement. It means the scope of services provided by the Manager. This is important because it limits the times when travel is reimbursed.

Second, note that the language does not mention “administrative fees.” Generally, Managers should not charge an Admin fee. It’s a junk fee that some larger management companies will try to charge. Again, this is another reason to hire an attorney to be in your corner in the negotiation, to rebalance the power dynamics in the negotiation so that the Manager can’t bully you into accepting terms that are over the top.

To sum it up, the "Compensation and Fees" section of an Influencer Management Agreement is one of the most important sections in a management agreement. Don't let its seeming simplicity fool you. It directly affects your bottom line, and therefore requires graceful negotiation, clear understanding, and vigilance to the fine print.

Next minisode we will turn to the next section in Influencer Management Agreements: Termination.

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