19 September 2018
Hotels have long recognised the value that on-site restaurants can bring to their offering. They are increasingly joining forces with celebrity chefs to forge partnerships aiming to run restaurants of distinction and culinary sophistication.
Such ventures work best when they are framed as a genuine partnership, designed to ensure that the joint brand is worth more than the sum of its constituent parts. Of course, this is easier said than done. In our experience forged from assisting clients on both sides of the fence in negotiating these deals, it pays to think carefully about what the venture is designed to achieve and to structure the arrangements accordingly.
But, it is also well known that celebrity chefs are notoriously independently minded and used to running things in their own image. This creates an obvious tension between the need of the hotel to oversee the running of the restaurant facilities and the wish of the chef to maintain their creative independence.
The best and most successful partnerships tackle these issues head on, in particular by making sure that the contractual arrangements are carefully constructed and provide for all eventualities. From the hotelier’s perspective, this means in particular:
- Detailing each party’s duties: a well prepared contract should be as specific as possible in laying out the respective duties of the hotelier and the chef. Clearly defining and setting out the chef’s responsibilities is crucial to avoid future disagreements and, ultimately, protect one’s right to terminate if things don’t go according to plan.
- IP protection and usage: each side will want to make sure they protect ownership rights in their IP. Celebrity chefs are understandably protective of their image and brand and will want to have oversight as to how they are used in conjunction with the hotel’s own brand. The key issue here for the hotelier will be to ensure that they are granted sufficient rights to be able fully to exploit the chef’s brand in conjunction with their own, in particular in advertising and other such materials.
- Hoping for the best, preparing for the worst: from the outset of any partnership between a hotel and chef, the two sides will be looking forward to a fruitful relationship. In general, one can expect reality to match those expectations, but unfortunately this is not always going to be the case. Recognising this and accounting for the prospect that things might go wrong is paramount. As with any endorsement deal involving celebrity, protection is needed as much from what happens “off-site” as during the performance of any contractual obligations. There are various options to consider here, including termination provisions that can be triggered if the chef is unable to perform for any significant period and/or becomes embroiled in any scandal. It is important to try and define where the line is to be drawn and, in particular, at what point a hotel can simply walk away and on what terms. If termination is not an option, both sides should have a discussion about insurance and whether this can be used to help cover any gaps between them.
- Above all else, understand each other’s business realities: disputes often arise out of well-intentioned commercial contracts because one or other party fails fully to understand the business realties of the other. Hotel-chef agreements are no different. Both parties need to be realistic about what they can reasonably expect from a deal and to document it accordingly.
With the above in mind, hotels can approach contractual negotiations with celebrity chefs and those who represent them confident that they will be better able to maximise their return from the relationship, whilst also being protected from adverse eventualities.