What are the proper procedures to ensure that as a designer you are getting accurate access to the books?
I imagine as the designer you can do more than wait every month for a check to arrive with a “true” copy print out of the records. What should I do to make sure I get accurate records?
Thanks-
Nothing.
you sign an agreement, and hope they keep up their end.
unless you have direct access yourself (by way of permission with a computer, etc) they can always change the numbers, photoshop it, say a different number, etc.
thats the problem with royalties.
Getting into a conflict with your business arrangement can be fairly disadvantageous to both parties. The first step is to do business with people that you have some confidence. If there is a discrepancy between what you expect and what they are reporting then the diplomatic way might be to ask the other party why there is a difference between your expectations and their reporting and see if the answer makes sense. Especially if they suggested to you that the volume would be higher than it is. Representing the manufacturing side, I would say that it’s easy to be optimistic about sales early on, that’s why the project is pursued. But not everyone can accurately predict what will actually happen with retailers or consumers. So it is possible that sales are not to expectations. If there is a plausible answer why the volume isn’t what you want, then there may be a way of solving it with a product modification or some other way… If you feel fairly sure they’re ripping you off, it’s usually pretty difficult to pursue them in a way that you’ll come out ahead financially (unless the amount of money involved is obscenely high…)
you can hire an independent auditor, this is typically included in a royalty agreement. This would cost a lot of money, and would only be worthwhile if you were dealing with serious quantities and sums of money.
In general, you are relying on the honesty of your partner.
A friend of mine (a very well known designer) went on “factory tour” unannounced, to watch his chairs rolling off the production line and being packed into boxes.
“so how many do you ship per day” he asked the forman.
He got accurate numbers then went back to management to pin them down on contractual obligations.