Drake has a bourbon. Wayne Gretzky owns a vineyard and a distillery. Céline Dion has perfumes. Justin Bieber co-created a line of Timbits with Tim Hortons. Ryan Reynolds invested in a gin company before selling it. And don’t even get me started on how many celebrities have attempted to start a cannabis brand.
Canada has produced a remarkable number of global cultural icons, and some have succeeded in following a specific recipe: build awareness, then monetize it through brand extensions, equity investments, licensing agreements and commercial partnerships. Press releases are always triumphant.
The legal documents that support them tell a completely different story.
As a lawyer, I spend my days reading the contracts that no one photographs at the launch event: the trademark licensing agreements, investment documents, and co-branding agreements that determine who actually owns what once the social media rollout is complete. Here are some observations from what I learned about cases involving public figures.
The brand is the asset
Let’s start with the most fundamental point, which is also the one that is most often overlooked: the name, image and trademarks associated with a celebrity constitute valuable commercial assets, sometimes even more valuable than the product to which they are attached.
When a musician lends his name to a food brand, or when an athlete invests in a supplement company, the real issue is not the consumer product itself. Rather, it is a matter of associating a protected intellectual property asset, namely the celebrity’s brand, with a commercial vehicle in the hope that both parties will benefit from it. The product serves as a support. The name is what has value.
This means that registering a trademark for the product is not a formality to be taken care of after the conclusion of the agreement. It is the foundation on which the entire structure rests. A name or logo that has not been properly registered in each relevant territory may be monopolized, diluted, counterfeited or simply appropriated by someone who filed an application before you. Canada and the United States operate under entirely separate trademark regimes, and believing that a U.S. registration adequately protects against risks in Canada, or vice versa, is a costly and surprisingly common mistake. The period between the public announcement of a partnership and the filing of a trademark application in the other country can be very short.
I saw it happen.
Equity participation is not synonymous with control
Brand partnerships with celebrities are often accompanied by the announcement of an “equity stake”, and for good reasons: it looks more attractive than a simple licensing fee, aligns long-term interests and offers the celebrity a narrative based on ownership rather than endorsement. The property goes better in an interview. She is more photogenic. It corresponds to the spirit of the times, where every cultural figure is also supposed to be an entrepreneur.
But a stake in a private company is worth exactly what the shareholders’ agreement provides. If this agreement grants the celebrity a minority position with limited information rights, without real representation on the board, with a drag clause allowing them to be forced to sell according to a third party’s timetable, as well as a poorly drafted exit mechanism, this participation may prove difficult to monetize. The celebrity name will have generated considerable commercial value for the brand. The celebrity itself could, however, end up with parts that are difficult to convert into something concrete.
This reality is particularly stark in the restaurant and food and beverage industries, where celebrity-related brand extensions are both common and particularly vulnerable to reputational risks, which quickly make headlines and can lead to a collapse under the weight of poor media coverage. No indemnity clause makes a tabloid story disappear.
When a celebrity-backed restaurant concept fails publicly and chaotically, legal documents can determine who absorbs the financial losses. They do not determine who absorbs the reputational damage.
The hidden clause that no one talks about
Equity participation and licenses represent only part of the legal architecture. The other is the endorsement agreement itself. Most endorsement contracts involve two categories of termination risks that are rarely publicized. The first is the morality clause: a provision that allows a brand to end a relationship if, in its judgment, the spokesperson becomes associated with scandal, public discredit, or conduct likely to tarnish the brand’s image. The wording is usually broad by intention, and the subjective decision of the brand owner can easily lead to disputes.
Canada has also produced an instructive case on this precise intersection. In Zigomanis v. United States D’Angelo Brandsan Ontario court examined what happened when an energy drink company purported to terminate its endorsement contract with professional hockey player Mike Zigomanis for two reasons: his demotion from the NHL to a farm club and the publication online, without his consent, of intimate photos he had sent in private to his spouse at the time before signing the contract. The brand argued that both events triggered the termination provisions. The court rejected both arguments. Demotion was not clearly provided for in the contract as a reason for termination. As for the photographs, taken and shared privately before the existence of the agreement, they did not constitute conduct likely to “shock, insult or offend the community” within the meaning of the morality clause, particularly since they were private, consensual communications prior to the contract. D’Angelo Brands therefore wrongly terminated the agreement and had to pay the full value of the contract.
The lesson is simple: the negotiation of the morality clause deserves as much attention as that of fees. An overly broadly worded clause grants the brand immense unilateral power to exit a relationship at the first sign of controversy, leaving the spokesperson with legal recourse as the only solution. A more restrictive clause provides more protection to the celebrity, but may expose the brand to the very reputational association it was seeking to avoid. Neither side gains from imprecision. The contract signed at the time of the announcement is the same one that will determine who pays who when everything goes wrong.
What really protects you
None of this is an argument against celebrity brand partnerships, which can be truly lucrative and strategically relevant when structured well. Rather, it is an argument in favor of treating legal architecture as rigorously as marketing strategy, instead of relegating law to a last-minute step.
Register trademarks associated with the celebrity-endorsed product before any public announcement. Negotiate the shareholders’ agreement as rigorously as the ownership percentage, since this percentage is almost meaningless without understanding the conditions that govern it. Know what a name is licensed to do, what standards govern its use, and what happens contractually if the company operating that brand goes bankrupt, is acquired, or simply stops answering calls.
The photo taken during the launch will live indefinitely on social networks. The contract will sleep in a drawer. But when things go wrong, he’s the one who determines what happens next.
The celebrity is the asset. The contract is the insurance policy.
Chad Finkelstein is a partner and licensed trademark agent at Dale & Lessmann in Toronto.
