Individuals who come to an Industrial Designer thinking “I’ll offer this guy royalties instead of actually paying him” are generally in the mindset to screw over people. Unless they’re all in, and willing to pay you with their hard-earned cash, 99.9% of the time, they’re trying to get work for free. Why else would they come to you in the first place offering royalties? The absolute simple and real answer is, so they don’t have to pay you with their own money. They are hoping you will create these designs for free, and that they are so amazing, that they will profit from them. Only then would you get a little slice.
And if they do hit it big, guess who the first one they’ll forget about will be?
For it to work, you’re going to need…
A) An extraordinary amount of trust (we all know best friends and family members even screw each other over out of millions).
B) An extraordinary amount of luck.
C) To put in a lot of your valuable time into work which you may never get paid for (this is called risk, which you are taking with a faceless company whom you’ve never worked with before).
D) A great team of high-paid lawyers to fight for you (that is, if the product is a multimillion dollar success and you are owed a large piece of that pie, otherwise, the lawyer fees won’t be worth it).
E) Quite a bit of experience with royalties negotiations from previous clients.
F) To hope that this company is successful at the hundreds of other issues with actually running a business, not making one simple mistake to tank the business (accounting, shipping, manufacturing, marketing, branding, pricing, distribution, sales, etc). It is very easy for a company to mess up and go under.
The odds are not in your favor. The house always wins.