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Drafting a sponsorship agreement involves concretely defining the mutual performances: what the sponsor provides, the exposure the sponsored party offers in return, the duration, the use of the brand, and the tax arrangements. Because sponsorship is a reciprocal agreement (Art. 6:261 BW) without a statutory template, the content of the contract determines whether you can enforce the agreements later.
The short answer
- Parties and duration: who sponsors whom, and for how long.
- Contribution: the amount, goods, or services of the sponsor.
- Consideration: the exposure, specific in format, location, duration, and number.
- Trademark usage: the license for logo, name, and image.
- Tax: agreements regarding VAT and invoicing.
- Termination: cancellation, breach, and exclusivity.
Drafting a sponsorship agreement: the core
The contract begins with the parties, the term, and the sponsor's contribution. Specify whether the contribution consists of a sum of money, goods, or services, and when it is to be delivered. In the case of a multi-year agreement, include whether the contribution is indexed annually or remains the same.
Next comes the most important part: the consideration. Because the law does not have a separate chapter for sponsorship, the success of the agreement depends on how clearly you define the exposure. Vague agreements are difficult to enforce; concrete agreements provide both parties with a solid foundation.
Making the consideration concrete
Describe the exposure in such a way that there is no room for explanation. Consider:
- Placement and size: logo on the shirts, on signage along the field, or on the website, with dimensions.
- Duration and frequency: how long the message is visible and how often, for example per event or per season.
- Number: the number of mentions, free tickets, or endorsements.
- Position: main sponsor or co-sponsor, and whether exclusivity is associated with it.
The more concrete this is, the easier it is to take action if the sponsored party fails to meet the agreements. In the event of a default, you can demand performance, a discount, or dissolution, but only if what was promised has been established.
Trademark use and exclusivity
Sponsorship means that parties use each other's brand and imagery. Therefore, arrange a license: specify who may use which logo, name, and photo, for what purpose, and for how long. Trademarks are protected by trademark law and visual material by copyright law, so use without permission can constitute an infringement. Specify whether prior approval is required for communications and what happens to the use after the transaction ends.
Exclusivity is a separate point of attention. If the sponsor wants to be the only one in their industry, stipulate this, including the scope. Without an exclusivity clause, the sponsored party could also bring in a competitor, which erodes the value of the exposure.
Tax and financial agreements
Explicitly include the tax aspect. The consideration is generally a taxable service, so agree that the sponsored party charges VAT on the contribution and at what times invoicing will take place. For the sponsor, sponsorship costs are in principle deductible as business expenses, provided there is advertising value in return. By clearly documenting the consideration, you immediately substantiate the business nature, which keeps the distinction clear compared to a non-deductible donation.
Termination, breach and liability
Regulate how the agreement ends and what happens if a party defaults. Include a notice period, a provision for early termination, and agreements regarding what happens if exposure fails to materialize or if either party becomes embroiled in controversy. A reputation clause can be valuable: if the sponsored party receives negative media attention, the sponsor may wish to terminate the agreement without losing the entire contribution.
Practical example: A catering company sponsored a regional event with an in-kind contribution. The agreement specified the number of mentions, the placement of the logo on the program and the website, and a clause stating that in the event of the event's cancellation, the contribution would be settled pro rata. When the event was shortened by one day, the company was able to reclaim a portion based on that clause.
Honest recommendation
You don't always need a lawyer. For a small, local sponsorship amount with simple exposure and no exclusivity, a short, clear agreement drafted by yourself suffices. In that case, ensure that the contribution, consideration, duration, trademark usage, and VAT agreement are included.
Be sure to have the agreement drafted or reviewed for larger amounts, multi-year agreements, exclusivity, or the use of the trademarks and imagery of well-known parties. In such cases, the licensing terms, the reputation clause, and the tax treatment carry significant weight, and an error could cost you exposure or tax deductions. A brief check on these points is a small investment.
Read more: sponsorship agreement, what is a sponsorship agreement and have a sponsorship agreement drafted.
Frequently Asked Questions
The parties and duration, the sponsor's contribution, the consideration (specifically in format, location, duration, and quantity), the license for trademark use, the tax and invoicing arrangements, and a provision for termination and default. Because sponsorship is an unnamed agreement, the content determines whether you can enforce the agreements.
As specific as possible: placement and size of the logo, duration and frequency, number of mentions or free tickets, and the position (main or secondary sponsor). An agreement such as “we will mention you somewhere” is too vague to enforce. In the event of a breach, you can only demand performance or dissolution if what was promised has been established.
Only if the sponsor wants to be the only one in their industry. In that case, define the scope. Without an exclusivity clause, the sponsored party could also bring in a competitor, which reduces the value of the exposure. For a small, local sponsorship, exclusivity is usually not necessary.
With a license: who may use which logo, name, and photo, for what purpose and for how long, and whether prior approval is required. Trademarks are protected under trademark law and visual material under the Copyright Act. Also regulate what happens to the use after the agreement expires.
The consideration is generally a taxable service, so agree that the sponsored party charges VAT on the contribution and at what times invoicing will take place. The sponsor can deduct that VAT to the extent that they perform taxable services. Establish the invoicing dates, especially in the case of a multi-year agreement.
Only if you include a clause to that effect. A reputation clause stipulates that the sponsor can terminate the agreement or reduce the contribution if the sponsored party receives negative media attention. Without such an agreement, you are bound by the standard rules regarding breach of contract and termination.
Yes, indirectly. Sponsorship costs are deductible as business expenses provided there is advertising value in return. By clearly documenting the consideration, you demonstrate the business nature and maintain a clear distinction from a non-deductible donation. If in doubt regarding the tax treatment, it is advisable to check with your accountant.
