Exclusivity is often the most expensive clause in a brand agreement, and the least precisely drafted. The question is never whether the talent is exclusive. It is what, exactly, has been taken off the table, for how long, and at what price.
Start with the category
A restriction on “competitive products” means little until the category is defined. A beverage exclusivity may or may not reach energy drinks, powders, ready-to-drink coffee or alcohol. The narrower and more concrete the category language, the easier it is to price and to police.
Category creep is the common failure: a list that begins with three named competitors and ends with “and any similar company” has no fixed edge.
Territory and channel are separate questions
A worldwide restriction on paid media is a different economic commitment from a domestic restriction on organic posting. Each dimension—territory, channel, format—multiplies the value of what is being surrendered and should be negotiated, not assumed.
The competitor set should be knowable on signing day
Named-competitor lists age quickly, but they are auditable. Open-ended standards shift the risk of judgment calls onto the party with the least information. A hybrid approach lists named competitors and adds a defined mechanism for updates, rather than a vague standard.
Duration includes the tail
Post-term restrictions extend the economics of the deal past its stated end. A six-month exclusivity tail on a twelve-month agreement is an eighteen-month commitment and should be priced accordingly. Tails also interact with renewal options: an option plus a tail can lock a category for years.
Price the restriction on its own line
Whatever is restricted should be valued separately from the deliverables. When exclusivity rides along unpriced, the restricted party has usually given away the most valuable term in the document without noticing.
Related practices
General information only. Nothing on this page is legal advice or a substitute for advice on specific facts. Legal & notices.