I have been working with a service agency that has managed my Etsy account for almost two years. They handle the store for me, and we operate on a profit split model. The results have been great, and it provides me with a decent passive income.
I am considering starting another account with them. Since it’s a profit split model and they manage all the tasks, they are asking for a partnership agreement for at least a year, which seems fair to me because growing a new store takes time.
My question is: how legal is such an agreement, and what precautions should I take before entering into it?
I trust their skills but just want to be cautious.
A profit-split agreement with an agency managing your Etsy store can be perfectly legal, provided it is clearly written, mutually agreed, and reflects the actual working relationship. To protect yourself, ensure the agreement includes: (1) precise terms of profit calculation and payout frequency; (2) who owns the store, brand, and intellectual property (like product designs or customer data); (3) termination clauses—what happens if either party wants out before the year is up; (4) dispute resolution method (e.g. mediation or specific court jurisdiction); and (5) clauses on confidentiality, non-compete, and non-circumvention, if relevant. Also, clarify who bears liability for policy violations or tax obligations. Ideally, have a solicitor review the draft before signing, especially if revenue is meaningful.
Agreements are only as good as the contract, would I trust a ChatGPT-generated one? Without having it checked by a specialist in this field, absolutely not. As for precautions: make sure you ALWAYS have access. You need a reasonable exit agreement and a strategy in case anything goes wrong. You should verify that the company doing the work is sound and reliable. You must remain in control of the cash at all times. BOTH parties should have proper insurance in place. Just a few things that jumped out at me.