Article By Barbara F. Dunn O’Neal
Fans of the movie, “The Parent Trap” (both the original and remake versions) will remember the song, “Let’s get together…yeah…yeah….yeah.” Well for many organizations, getting together to host their meetings and expositions is a smart business idea. Whether it is to answer the call of exhibitors which exhibit at multiple trade shows, to harness the power of multiple membership bases, or to save on the high costs of running a large meeting or exposition, organizations have found much success in banding together. Yet if the legal considerations of hosting a joint event are not properly addressed prior to the event, organizations can find themselves with more legal issues than if they were to host the event on their own. Following is a summary of the top 5 legal considerations to include in agreements for the hosting of joint meetings and expositions.
1. Allocation of Responsibilities
Coming together means a change in responsibilities from what an organization is used to doing relative to its conference to what it will now be doing in connection with a joint meeting. This includes site selection, contract negotiation, budget development and management, staffing, marketing and communications, exhibit sales, sponsorship and advertising, onsite logistics, and post-conference work. Organizations should break down these categories of work into “buckets” and then discuss which “buckets” each organization will handle on their own and which they will do together. Consideration should be given to components of the event which will include only that organization’s members and attendees and those which will include all members and attendees.
Of particular importance will be which organization(s) sign facility and vendor contracts in connection with the event. Will they be signed in one or the other organization’s name or will they be signed in both organizations’ names? Ideally, the contracts would be signed in both organizations’ names to tie both to the rights and duties under those contracts. In some cases, contracts which one organization signed years ago might need to be modified such that it would now cover both organizations or the agreement would need to include a statement that regardless of which organization signs the contract, it is intended to benefit both organizations equally.
2. Financial Considerations
Coming together means the sharing of revenue as well as expenses. That can be a good news/bad news proposition given that money is typically the root cause of any dispute. As such, it is critical that the agreement address everything from budgeting for the event through closing financials and allocations.
The typical approach involves the parties mutually agreeing on a budget for the event and that neither party would exceed the budget without the other party’s prior consent. The parties would then define “revenue” to include all revenue coming in the door from attendees, exhibitors, sponsors, and advertisers. The definition of “expenses” would then include those budgeted expenses which relate to the event (but which exclude expenses relating to each organization’s separate events). Revenue less expenses is often defined as “net revenue” and that typically serves as the basis for revenue
allocation between the parties. So if the parties agreed that they would share net revenue on an equal basis and net revenue
was $100,000, each party would receive $50,000. The process for reviewing and reconciling the financial aspects of the event must be addressed in the agreement as well as a process for auditing the financials should one organization dispute the calculations.
3. Ownership of Data
Coming together means sharing confidential and proprietary information including member, exhibitor and sponsor lists. It is essential that before such information is shared with the other organization, the parties enter into a nondisclosure agreement which protects the information and controls its use. Of course, new confidential and proprietary information will be gained from the joint relationship so it is important to understand which organization(s) own the original and the new information. This is often a battleground later on if the parties decide to part ways so getting it right at the outset is critical.
Further, most organizations develop catchy names and logos for the events. The question then becomes which organization(s) own the name and logo and any other intellectual property developed in connection with the event. It may be the case that one organization has owned the name of the event for many years and that the new organization wants to be a part of that event such that the parties will agree on a licensing arrangement for the new organization’s use of the name.
Also, employees of one or the other organization may be creating new content for the event such as marketing and promotional materials, the parties must agree which organization(s) own the right to such materials.
4. Liability Issues
Coming together typically means larger events with more people and more opportunity for liability. What if someone slips and falls in the exhibit area? Will one or both organizations be responsible for the resulting damages? The agreement between the parties must address the potential of liability and how the parties will manage such liability. Vendor contracts should include provisions which indemnify both organizations and the organizations should ensure they have sufficient insurance coverage in place to address the risks associated with heightened liability exposure.
As noted above, if both parties sign a contract, both parties are liable under a contract. That is typically known as “joint and several” liability meaning that either party or both parties are liable for 100% of the damages. Here again, addressing allocation of risk in an agreement is as important as addressing the allocation of financial gain from the event. Note that risk includes financial liability for occurrences such as cancellation of the event or hotel room block attrition.
5. Term and Termination
Coming together means hoping for the best but planning for the worst. While each organization may intend for this arrangement to be a long and happy union, planning for a potential breakup of that union is important. That means identifying which event(s) are covered by the agreement and planning for any potential renewal or termination of the agreement. Who would “own” the facility contracts? The party which signed the contract or both parties? What about continued use of the name, logo and data? These are all critical items to address in the agreement.
Given that most events are years in the planning, any anticipated termination should be decided upon well in advance so that the parties can plan accordingly. For example, if the agreement is to cover the next 3 annual events, if one party wants to terminate the agreement for the third event, it must do so shortly after the first event thereby giving the other party ample time to adapt. Further, upon any termination, facility and other vendor contracts may need to be assigned from one part to another depending on which organization (if any) will continue on with the event.
As you can see from the above, there are many important business and legal items to consider when parties are looking to come together. But with proper planning and a comprehensive agreement, the parties can confidently step down the path together.
Barbara Dunn O’Neal is a partner in the Chicago office of Barnes & Thornburg LLP where she concentrates her practice in corporate law for nonprofit organizations as well as meetings, travel and hospitality law. She can be reached directly at (312) 214-4837 or barbara. firstname.lastname@example.org.
©Copyright 2016. Barbara Dunn O’Neal, Barnes & Thornburg LLP. Chicago, Illinois, USA. All rights reserved under both international and Pan American copyright conventions. No republication permitted without the express written consent of the copyright holder. This article shall not be construed as legal advice. In all instances, individuals should seek their own legal counsel.