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I'm currently working on a mobile game as an independent freelancer and I recently got in touch with a talented designer for eventual partnership.

I'm willing to pay the designer for his collaboration (we'll probably use oDesk for that), but I'm also offering him partnership (we'll share any potential revenue the game might generate once released) for a couple reasons:

  • I want the designer to consider the project as his own and give his best
  • The budget I'm assigning to graphic design is relatively tight

The problem is that the designer and I did not know each other before this arose, we live in different countries, and we obviously cannot trust each other on simple promise.

Is there any kind of contract or legal procedure that I can follow to prove to my eventual partner that I'm serious about the deal and that I'm willing to share revenue with him in the future?

I'm an independent iOS developer at the moment, and I intend to release an android version at a later stage.

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    You can make a deal on odesk like this: you put design money into escrow and you start partnership. If you do not respect your part, he will at least get money from escrow. If he does not respect his part, you cancel the project. If everything is well documented on oDesk, they will rule in your favor. Other than this, I personally do not think that you two can sign so quality international binding contract. The money is small and court fees and travelling will cost more than the budget. – Peter MV Mar 21 '15 at 20:32
  • @PeterMV thanks for your help. The problem is how's the designer supposed to verify how much revenue I'm generating from the app store? As the actual iOS developer I will be receiving revenue in my bank account and obviously I can't give the designer access to my personal bank account. Furthermore It's not just a predefined sum of money that I can put into escrow and problem solved, it's a percentage of the money I will be making during years. – ALTN Mar 21 '15 at 21:56
  • You can add him to play store developer as a tech user with access to view earnings for each app. If I am not mistaken... – Peter MV Mar 21 '15 at 22:57
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    @PeterMV For some reason I thought only companies are authorized to do this, but I just double checked and realized that I indeed can do this as an independent developer. I can add him with a financial role and he will be authorized to see all the sales and revenue reports. The only problem left now is how do I guarantee to him that I will be paying a percentage of the revenue he'd be seeing in iTunes... I'll investigate Spencer's suggestion. Thanks for your help... I would have up-voted your comments if I had enough reputations :) – ALTN Mar 21 '15 at 23:21
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I would sign a partnership agreement if you want to prove you're serious. Optionally, you could form an LLC together if you want to have better liability protection.

  • thanks for your help. Sounds interesting, I'll investigate this and see how I can apply it to my case and let you know. I'll check your answer as soon as I make sure it solves my problem (might take a few days). Thanks again! – ALTN Mar 21 '15 at 22:00
  • Unfortunately your partnership agreement link supports only US and UK agreements. The LLC idea sounds too much for just an App. – ALTN Mar 25 '15 at 8:21
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Welcome to the world of when The Coder becomes a Product Manager

I've found myself in the exact same situations several times and on different sides of the stick. I've learned the hard way.

Having been buried in code and always concerning the business side of things hand in hand.. I can definitely empathize so I took some time to get a bit detailed. If you're not/have never been in the "corporate" culture, give http://scrummethodology.com/scrum-product-owner/ a read. You will see how things progress from being developer to managing the business end of things.

Disclaimer: This is my opinion driven by experience, I build things, not litigate... though I'm sure an Intellectual Property Attorney makes far more!

Offering compensation plus ownership for services provided (I'm assuming here that he/she is to deliver beforehand) can invite some unforeseen, or unwanted, risks:

You'll need a contract (or to simplify, an "agreement") covering at-least the:

  1. Cost of things.. net cost (total $ to get up and running) and the worth of the initial (version 1? iteration 1?).
  2. Once costs have been figured out you could simply create a share-to-cost ratio. (i.e.: ACME LLC has 1000 shares, each worth $10 making the company worth a mediocre $10,000 -- due to some hardware investment perhaps.)
  3. Ownership of the materials rendered/produced -- I can't stress this one enough. Copyright law is (and rightfully so) by default in favor of the content creator. You can, and should if nothing else, declare that you/your entity owns any and all works produced since date of employment/contract inception.

Providing compensation for works provided & to be created:

  1. You can pay hard cold cash (in case you formed an entity already, you should be able to bring it on as material debt so you can write it off).
  2. You can pay in straight up issuance of shares of your entity (The outcome of #2 in the section above-^).
  3. You can use a strategy called "vesting equity" wherein you create an agreement that he/she is to meet a.b.c. expectations by xyz date and must remain an active participant (employee, board member, or whatever title you want) until a date set in the future where the share issuance will be finalized.
  4. Both cash AND equity -- just mix it up with the above points in mind.
  5. Just pay cash and make sure you get sole copyright (can be as simple as him stating it in an email, receipt, etc..)

Personally, going the "let me give you some cash now so you can buy monsters & red bulls and we do a vesting equity agreement ... work some get paid some, and so forth". The caveat is that it will cost you some money to have an entity formed that has the capacity for stock issuance (S-Corp, C-corp). On the low side I remember paying right around $600~ a few years ago. LegalZoom will save you a lot vs a local lawyer if you keep things simple, check out http://www.legalzoom.com/business/business-types/compare-business-structures.html. This of course gives you some tax advantages (pass-through vs. not) rather than being a simple Sole Proprietorship or LLC.

At the end of the day, I think you can knock this out with a simple contract that identifies the parties, sets the precedence of expectations, covers your copyright ownership part and overall covers your butt in the event you need to collect.

  • @canadian Thanks for the edits .. New to interacting with this community. – Matthew Makaio Oct 21 '15 at 1:11

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