5 Legal Problems Fashion Entrepreneurs Face And How to Avoid Them in Nigeria

While running a fashion business, many issues will come up, some big and some small. If as a fashion entrepreneur, you own the brand or are responsible for the wellbeing of the business, there are different problems of entrepreneurship that you will have to face for your brand to move forward.

Fortunately, you can preempt some of these issues before they arise so that you can nip them in the bud. Some of these issues concern the law and we will cover 5 of the important legal issues you must plan to avoid today.

Check Out: Not Filing Tax Returns On Time And 4 Other Legal Mistakes To Avoid In Growing Your Fashion Brand

5 Legal Potholes Every Startup Fashion Entrepreneur Must Avoid

Partnership Dispute as a result of lack of Founder’s Agreement

If your fashion business is not solely owned by you, you need to draft a founders’ agreement early in the partnership without emotional sentiments. The allocation of your business ownership is very important and determines a lot in the business. While you might feel reluctant to draft an agreement especially if you started the business with a close family member or friend, drafting it can save you from problems that entrepreneurs face in this area later on.

It is common for pre-incorporation partners to disappear before your fashion business becomes profitable. It is also possible for a former partner to show up to claim profits if your business makes it big. To avoid getting into messy battles over your business’s profit or assets later on in the future, you need that agreement.

The agreement should clearly state what each partner’s stake is in the business and what each person’s duties are. This way everything is clearly stated out to prevent a messy legal battle in future.

Company Policy Breaches due to lack of employee contract

You must draft formal agreements for all employees or consultants that will work with your business. This way, everyone is on the same page as regards what you expect from them. Your employee agreement should clearly state every policy that you hold dear in your company and who owns the intellectual property your staff members create.

Another way to go about this is to have an employee handbook in place to state the rules. You must ensure that all new employees sign an acknowledgement form stating that they received the handbook and it should contain every little detail about their employment with you. With this agreement in place, you can rest easy knowing everything is in place.

Intellectual Property Theft from lack of Trademarks and NDAs

There is a lot of intellectual property to protect in the fashion industry. Right from your business name to your logo, fabric design marks and colour splashes on your outfits, styles and patterns of your outfits, and methods of achieving a result on an outfit. All of these must be kept safe if you want to build an exclusive fashion brand for yourself.

The intellectual property of your fashion business is very important. At all costs, you must protect your startup’s name because it is one of your most valuable assets. Imagine you start using a business name and your brand is gaining popularity only to find out another business has trademarked that name for themselves. It’ll hurt and cost you a lot. To be sure this doesn’t happen, you must trademark it.

For example, recently, Ugo Monye filed a lawsuit against the producers of Coming2America for infringing on his intellectual property. He could do this only because he had patented the designs used in the movie.

Also, you might want to draw up a non-disclosure agreement if you wish to share proprietary information with another company or individual(s). This agreement will prevent them from disclosing your information to a third party. It could be used for employees, investors, or potential business partners that you might need to share your trade secrets with. Your NDA must be very detailed and should lay out what information will be shared.

Improper Licencing and Incorporation

In deciding what type of registration to do for your fashion business, whether as a business name or an incorporated company, you must ask questions. This way, you know what you need to do to remain on the good side of the law and stick to it.

Depending on your country, running a fashion business might require several licenses. As a fashion entrepreneur, it is your duty to find out what licenses you need to have in place to successfully run your business and get them.

Poor Legal Documentation

You may wonder, “I’m a startup fashion business, do I really need to hire a lawyer?” The answer is yes. Running a fashion business comes with its ups and downs and every successful business eventually runs into its share of legal issues. When this happens, you’re going to need solid legal advice to lean on.

Also, you might imagine a legal issue is small when, in fact, it can greatly affect your business negatively. A lawyer sees what you cannot see to help you avoid potential messy situations. While you can read up on some legal issues, consulting a good attorney is way better than trying to run things yourself.

In drafting all of your legal documents including your founders’, employee, non-disclosure and pull agreements, you will need the services of a skilled lawyer. It is important to note that you should never give your lawyers equity or use your investors’ lawyers. If you do not have the funds to hire a lawyer yet, check out open source agreements to help you draft standard legal agreements.

Steps to avoid these legal issues that entrepreneurs face in the Fashion industry

Create a Founder’s Agreement
Have an employee contract or company policy handbook
Create a Non-disclosure agreement for your company dealings
Properly license and trademark your intellectual property
Hire a lawyer

With all of these in place, you will have fewer things to worry about as a startup fashion entrepreneur. This will save you the stress of battling one issue after another and allow you to focus on growing your business.