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Comedian Jamie Kennedy is all business when it comes to contracts and endorsement deals. The funnyman signed a $500,000 contract (in addition to stock options) with Yoostar to make three personal appearances and appear in 25 original clips for the self-described social entertainment website. Yoostar is a social media site that allows users to "put themselves" in famous television and movie scenes and act alongside the cast.
The star of "The Jamie Kennedy Experiment" claims that Yoostar overpromised and underdelivered when it came to his promotional agreement and is now suing the company for $250,000 and stock options, according to The Hollywood Reporter.
Jamie Kennedy's case against Yoostar Entertainment is something all small business owners could learn from. Celebrities hired to promote a product or serve as a spokesman for a company garner the majority of publicity when it comes to legal disputes, and it is typically the celebrity breaking the contact (see Paris Hilton on this issue) but don't forget about the other side of the contract. Small business owners breaching a promotional contract will find themselves getting negative publicity in addition to a potentially costly legal battle.
Moral of the story: Be careful what you promise, watch the terms of the contract you will get locked into, and don't spend more than you can afford. In addition to creating negative publicity surrounding a fallout with the very person you hired to promote your company, you may also be dooming your business. The bigger the celebrity, the bigger the problem, as he or she has the finances to hire a full-time legal team to come after you when issues arise. That could spell financial reunion for many a small business, so bear this in mind next time you approach a new pitchman for your company.