I agree with a lot of Taylors concerns and honesty.
If you are a position of power and trust, then roytalties can make a lot of sense. But all of his concerns are equally valid, and the amount of legal work needed to set it up and potentially enforce it may wind up back firing. As he mentioned, you have no legal right to access the books of most companies (some public companies may disclose individual product sales but it is typically rare) to see how many units they sold.
At that point it becomes a their word vs your word situation which puts you in a bad spot. “I think you sold a million of these” “No we sold 15” “OK well looks like I’ll see you in court!”
If it was a situation where you were working with a client where you had a long established and very trusted relationship with, I would feel differently about it. So you would really have to evaluate it yourself.
I just got burned by a client for a small sum of money, but even with all of the agreements setup the amount of time and pain in the ass it would take for me to pull him into small claims court, deal with all the headache and then actually deal with getting payment isn’t worth the amount of money that was lost. So now I’m starting to become the “trust no one” guy.