AGENDA REPORT
Meeting Date:
Item Number:
To:
From:
Subject:
Attachments: 1. Proposal by Skechers USA, Inc.
2. September 12, 2022 Liaison Report (Without attachments)
RECOMMENDATION
The Beverly Hills City Council Liaison Branding and Licensing Committee, Councilmember Mirisch and Councilmember Friedman, recommends the City Council approve the use of the Beverly Hills Shield by Skechers USA, Inc. (Skechers) and enter into an agreement for the use of the Beverly Hills Shield by Skechers for apparel merchandise.
INTRODUCTION
This item seeks City Council approval of the recommendation of the Beverly Hills City Council Liaison Branding and Licensing Committee to approve the use of the Beverly Hills Shield by Skechers, a popular shoe retailer, for use of the Beverly Hills Shield on a collection of merchandise. Under the agreement terms proposed for approval, the City will receive a one-time, non-refundable advance payment fee of $25,000 recoupable against royalties. Royalty payments will be calculated at 15% of FOB (Free on Board) First Cost. FOB is defined as the greater of:
(1) ten dollars ($10) per pair of shoes; or
(2) the gross invoice price billed to Skechers by the selling factory or agent of the factory for the sales of Goods.
BEVERLW
HILLS
d
December 6, 2022
E-12
Honorable Mayor & City Council
Laura Biery, Marketing and Economic Sustainability Manager
APPROVAL OF THE RECOMMENDATION OF THE BEVERLY HILLS
CITY COUNCIL LIAISON BRANDING AND LICENSING COMMITTEE
REGARDING THE USE OF THE BEVERLY HILLS SHIELD BY
SKECHERS USA, INC.; AND
AUTHORIZE THE CITY MANAGER TO ENTER INTO AN
AGREEMENT, SUBJECT TO APPROVAL BY THE CITY ATTORNEY,
FOR THE USE OF THE BEVERLY HILLS SHIELD BY SKECHERS
USA, INC.
Meeting Date: December 6, 2022
DISCUSSION
Staff receives inquiries from individuals and businesses looking to use the Beverly Hills Shield or its likeness on products and merchandise. As requests are received, they are reviewed by the Beverly Hills City Council Liaison Branding and Licensing Committee (Committee). The Committee met on September 12, 2022, to discuss the use of the Beverly Hills Shield by Skechers and provided direction.
Skechers, based in Manhattan Beach, California, is the third largest footwear company in the world. The company specializes in footwear for casual, sport, work, and general use. Skechers x Beverly Hills limited edition collection will feature the Beverly Hills Shield surrounded by sunsets, palm trees, and bold colors on trendy sneakers, and slipon shoes that commemorates Skechers’ California heritage and Beverly Hills. The collection will also include one to two T-Shirt and Hoodie Style designs as well as a blanket. The approval of the City Shield on each of the items will be conditioned upon City Staff receiving draft designs and providing approval in advance of production.
The distribution plan for sales of the shoes and apparel are Skechers stores and ecommerce globally, and third party retailers. Skechers will market the collection globally. Skechers has indicated they will also explore finding a local Beverly Hills retailer for partnership for local sales of the goods as well.
During the September 12, 2022 Liaison Meeting, CMG Worldwide, Inc., the City’s trademark licensing agency, attended to receive feedback and direction regarding the Skechers proposal.
After further discussion during the Liaison Meeting, the Committee directed CMG Worldwide, Inc. to work with Skechers to bring forward an item to the full City Council with a recommendation for approval that would also include language specifically addressing safeguards to protect against any child labor or trafficked labor in production as well as a most favored nation clause ensuring the City receives the most favorable terms.
If approved by the City Council, a license agreement will be executed with terms that include the following:
Term: One (1) year from first launch date at retail. For purposes of the Agreement, “Launch” shall mean when the Collection first appears and is available for sale Online or in Physical Stores, whichever is earlier.
Renewal: Option to renew for an additional one (1) year if sales are greater than 200,000 units (all goods), for a max of two (2) additional years after the original term ends.
Goods: Skechers may use the Beverly Hills Shield in connection with the production and sales of shoes, one to two t-shirt and hoodie designs, and a blanket.
Skechers will include the following notation on the Goods (where possible), and packaging, advertising, and promotional material bearing: “The Beverly Hills Shield™ is a trademark of the City of Beverly Hills, www.BeverlyHills.org. ” Territory: Worldwide with merchandise sold in Skechers stores and online, as well as through third party retailers, and digital platforms as well as any physical store partnerships in Beverly Hills.
Meeting Date: December 6, 2022
Advertising: Skechers shall submit all catalog images featuring the Goods (i.e. images of the Goods appearing on the product pages on Skecher’s website), for use in advertisements and promotional material to the City for its written approval prior to publication.
Representation and Warranties Against Child Labor: Skechers represents and warrants compliance with their (1) supply chain verification and evaluation; (2) auditing of suppliers; (3) certification of materials incorporated into Skechers products; (4) internal accountability standards and protocols; (5) training of employees and management; (6) stakeholder commitment, all as outlined in the latest disclosure pursuant to the California Transparency in Supply Chains Act.
Compensation Fee and Royalties: Skechers shall pay a one-time, nonrefundable advance payment fee of $25,000 recoupable against royalties.
Royalty payments will be calculated at 15% of FOB First Cost. FOB is defined as the greater of:
(1) ten dollars ($10) per pair of shoes (no Goods other than shoes will be subject to this minimum); or
(2) the gross invoice price billed to Skechers by the selling factory or agent of the factory for the sales of Goods.
Attachment 1 to this Report provides additional information about the proposed Skechers x Beverly Hills collection.
FISCAL IMPACT
The fiscal impact of the approval of the use of the Beverly Hills Shield by Skechers includes the one-time, non-refundable advance payment fee of $25,000 recoupable against royalties. Royalty payments will be calculated at 15% of FOB (Free on Board) First Cost. FOB is defined as the greater of:
(1) ten dollars ($10) per pair of shoes (no Goods other than shoes will be subject to this minimum); or
(2) the gross invoice price billed to Skechers by the selling factory or agent of the factory for the sales of Goods.
Nancy Hunt Coffey,
Assistant City Manager
Approved By
Attachment 1
SKECHERS
A COLLABORATION
The Beverly Hills Shield logo is a symbol of quality and elegance representing the
sophistication and classic styling of an iconic internationally renowned city.
It's
something that people around the world want to connect with and celebrate.
As a global footwear brand with extensive experience in both lifestyle and high fashion collaborations, Skechers is positioned to develop a collection featuring Beverly Hills symbols and imagery that honors the city's treasured prestige. £»KE&HERS
LOCALLY BORN AND RAISED
Skechers was established 30 years ago in Manhattan Beach. just 15 miles south of Rodeo Drive. With our global headquarters in the South Bay, we remain committed to our community and our neighbors. The Southern California lifestyle is intrinsic to many of our collections. and our roots within Los Angeles allows us to understand the distinctive value of the Beverly Hills identity both within as well as separate from the broader region.
45KIE&HEIRS
$6 BILLION,
2021 'AL SALES
3rd LARGEST Global tootwoar brand
Distribution in over /80 COUNTRIES
4,300+ Skechers stores worldwide
OVER 300 MILLION ars shipped in 2021
·5K-5EV.-5
r
--�'\ ·- }
,,
L -/-
-1--1--t-- -
·5K-BEV-
+SK-BEV-6
·5K-BEV-2
I CONCEPTS
+$K. BEV1
l
WINDOW AND PACKAGING DESIGN CONCEPTS
• • • • • • • • •
CONCE
H
ANGTAG CONCEPTS
Boxes and hangtags will carry
over prints and designs featured
on the shoes to illustrate the
stylish elegance of the collection.
2 4
N ._
'
3 _ts
as7p. • 27»
e
A
SKECIHERS
COLLABORATIONS
Fresh limited-edition takes on style. Innovative materials that elevate the experience. Global powerhouses and regional trendy brands that generate buzz. Our partnerships and collaborations offer unique takes on Skechers style. With our attention to product and world-class marketing, we're always looking to create something new that pushes boundaries and excites consumers in unexpected ways. Join us and let's collaborate on an exclusive collection that expresses your brand in a new way.
S
KECHERS
LOS ANGELES Internationally renowned mur
alist
James Goldcrown brings his iconic
Love Wall heart designs to the
Skechers x JGoldcrown global
collaboration. The artist's colorful
and inspiring prints feature on a
range of lifestyle footwear and
apparel for women and girls.
Murat
by
James Goldcrown in
Beverly
Hills
BOX AND HANGTAG ARTWORK
Packaging and marketing
materials all feature the iconic
Love Wall heart design.
SKECHERS
LOS ANGELES
SKECHERS
LOS ANGELES
SKECHERS COLLABORATIONS
KECHER
X X X
kansaiyamamoto
Acclaimed Japanese avant -garde fashion brand Kansai Yamamoto brought its unique flavor to Skechers with a limited-edition footwear series created in the artist's signature bold and colorful style,
KE-CHERS
XX X
E:
kansalyamamoto
The artist's signature look inspired packaging
and marketing in the 2021 collaboration. The
art is featured on Skechers Max Cushioning,
Skechers D'Lites and other fashion styles for
men and women.
SKECHERS COLLABORATIONS
it--
J
f
•
a" kj cs-
' '
SKECHERS > DVF
SKECHERS
%
DVF
SKECHERS DVF
Skechers and Diane von Furstenberg come together in an iconic coordinated athleisure footwear and apparel collection that celebrates confident women wilh effortless style and accessible design.
DVF
Diane von Furstenberg's
signature prints and bold colors
plus the unparalleled comfort
of Skechers, this collab is
designed for those who push
beyond boundaries, challenge
the norms and inspire others.
SKECHERS
149679 WBPK
149678 NTBK
Attachment 2
CITY OF BEVERLY HILLS
POLICY AND MANAGEMENT
MEMORANDUM
TO: City Council Liaison/Branding and Licensing Committee FROM: Laura Biery, Marketing and Economic Sustainability Manager DATE: September 12, 2022
SUBJECT: Request for Use of City Shield by Skechers
ATTACHMENTS: 1. Skechers Look Book
2. Deal Memo from CMG Worldwide
INTRODUCTION
The City periodically receives inquiries about the use of the Beverly Hills Shield. At the last Branding and Licensing Liaison Meeting on June 10, 2022, Skechers requested to use the Beverly Hills Shield on a series of footwear items and apparel. This item provides the proposal and draft negotiated terms for the use of the City Shield by Skechers.
DISCUSSION
Background
Staff receives inquiries from individuals and businesses looking to use the Beverly Hills Shield on products and merchandise. As requests are received, they are referred to the City’s branding and licensing consultant CMG Worldwide. The City has contracted with CMG Worldwide since 2013.
Skechers, based in Manhattan Beach, California, is the third largest footwear company in world. The company specializes in footwear for casual, sport, work, and general use.
Skechers x Beverly Hills limited edition collection will feature the Beverly Hills Shield surrounded by sunsets, palm trees, and bold colors on trendy sneakers, and slip-on shoes that commemorates Skechers’ California heritage and Beverly Hills.
Skechers is seeking approval for the Skechers x Beverly Hills collection and has indicated that once approved, will explore finding an appropriate local Beverly Hills retailer for partnership for local sales of the shoe. The collection is also proposed to include one to two T-Shirt and Hoodie Style designs as well as a blanket. The approval of the City Shield on these items would be conditioned upon receiving draft designs in advance of approval for production.
Skechers California Heritage Collection
Skechers is interested in using the Beverly Hills Shield on trendy sneakers and slip-on shoes. The Beverly Hills Shield would be featured on a series of shoes reminiscent of the Beverly Hills lifestyle which includes sunsets, palm trees, and a bold color scheme. There 2 would be no alteration of the City Shield on the shoe. Skechers would feature the City Shield in standard gold or white.
The distribution plan for sales of the shoes are Skechers stores and ecommerce globally, and third party retailers. The items proposed for use of the Beverly Hills Shield include footwear, apparel, and a blanket.
Initial concepts have been developed for discussion. Skechers will market the collaboration globally and bring attention to the iconic fashion and style of Beverly Hills.
Proposed Deal Points (See Attachment 2 and Summarized Below):
Advance: $25,000 advance recoupable against royalties
Term: 1 year from 1st launch date at retail
Renewal: Option to renew for an additional one (1) year if sales are greater than 200,000 units, for a max of two (2) additional years after the original term ends
Distribution: Skechers stores and ecommerce, ecommerce websites, third party retailers, and digital platforms
Territory: Worldwide
Royalty: 15% of FOB First Cost (FOB First Cost is the cost of the gross invoice price billed to Skechers by the factory. It is essentially Skechers purchase price of items from the factory excluding freight, custom charges, duties and other taxes payable upon import of goods).
Decision Points for Consideration:
Is Skechers shoes an appropriate use of the Beverly Hills Shield? If the City wishes to grant the license, is the license granted under the condition that Skechers seeks a partnership with a Beverly Hills retailer or pop-up location? If the City wishes to grant the license, are the terms mentioned above acceptable?
FISCAL IMPACT
If the above agreement terms are accepted, the fiscal impact of the Skechers shoes deal is a $25,000 advance recoupable against royalties. Royalties will be calculated at 15% of FOB First Cost.
The initial term of the agreement is proposed for one (1) year with the option to renew for up to an additional two (2) years if sales are greater than 200,000 units.
RECOMMENDATION
It is recommended that the City Council Branding and Licensing Committee provide direction regarding use of the Beverly Hills Shield by Skechers. Based on direction received, the Skechers proposal may be scheduled for a future City Council meeting date for review and approval by the full City Council.