Band Operating Agreements
So 2010 is quickly coming to a close, and I thought I would get one last post in to wrap up the year here at the PunkLawyer blog. There has been quite a bit of hubbub online about the departure of founding members Josh and Zac Farro from the band Paramore, including dueling blog accounts of the circumstances surrounding said departure. To read the posts and view the videos, check out the coverage over at Alternative Press. While I’m not familiar with the actual operation within the band Paramore, I thought that this would be a good time to discuss band partnership or operating agreements.
More bands than you would think have operating agreements in place. These agreements can vary somewhat according to the type of business entity such as a corporation or limited liability company that a band chooses. The decision to create a business entity is important, and something I will cover in a future post. Depending on the particular entity you choose, an operating agreement can be required. This agreement will typically cover who is on the board of directors of the company, when, where and how often they will meet, how they can vote, and otherwise run the company. For a band, such an agreement can also address what rights members have to make purchases beyond a certain dollar amount on behalf of the band, as well as to enter into contracts on its behalf.
A particular area of importance to address in a band partnership or operating agreement is what happens when a member leaves. This is also an important issue for startup companies, where like a band a member can leave and potentially wreak havoc on the company if a procedure for the departure of that person is not in place. Think of the bands you have seen that tour with only one or two of the original members but still use the same name. While in some instances this may be done without the permission of the original members, in others it comes down to who owns the rights to the band name. A famous example is Guns N’ Roses, who have continued to exist in various incarnations with Axl Rose as the only remaining original member. The story goes that when the band was renegotiating its contract with Geffen Records, Axl had language added to the contract stating the he alone would own the name of the band. Once the band members signed that contract, Axl had the legal right to use that name. This would mean he can perform under that name with different members, license it for merchandise, you get the idea.
So how would you want to structure your band agreement to avoid later disputes as to the ownership of the band name, particularly after a band member leaves? You would want to include language that states what a departing member would receive in terms of compensation, and that he or she leaves with no rights to the band name, image and the like. Or your band may have a different view, but generally it is best to spell these type of issues out so that when you’re in the midst of the upheaval that can surround a band member’s exit you know that the issues are clear and in writing. An entertainment attorney can help your band draft such an agreement, as well as assist you in the process of incorporating or forming another type of business entity. Of course, you hope you never have to deal with these issues, but as a lawyer I like to try and plan for the worst but hope for the best. Hope that you all have a happy new year, I look forward to sharing more insights with you in 2011.