AGENDA REPORT
Meeting Date: December 5, 2023
Item Number:
To: Honorable Mayor & City Council
From: Magdalena Davis, Community Outreach Manager
Subject: RECOMMENDATION OF THE BEVERLY HILLS CITY COUNCIL
LIAISON BRANDING AND LICENSING COMMITTEE REGARDING
THE UPDATED USE OF THE BEVERLY HILLS SHIELD BY
SKECHERS USA, INC.; AND
AUTHORIZE THE CITY MANAGER TO AMEND AN AGREEMENT,
SUBJECT TO APPROVAL BY THE CITY ATTORNEY, FOR THE USE
OF THE BEVERLY HILLS SHIELD BY SKECHERS USA, INC.
Attachments: 1. Sketchers Updated Look Book
2. City Council Liaison/Branding and Licensing Committee Report from October 16, 2023 (Without Attachments)
3. City Council Agenda Report from December 6, 2022 (Without Attachments)
RECOMMENDATION
The Beverly Hills City Council Liaison Branding and Licensing Committee, Vice Mayor Friedman and Councilmember Nazarian, recommends the City Council approve the updated use of the Beverly Hills Shield by Skechers USA, Inc. (Skechers) and authorize the City Manager to amend an agreement between the City and Skechers for the use of the Beverly Hills Shield by Skechers for shoe merchandise.
INTRODUCTION
The City periodically receives inquiries about the use of the trademarked Beverly Hills City Shield. On October 16, 2023, City Council Liaison/Branding and Licensing Committee of Vice Mayor Friedman and Councilmember Nazarian (Liaisons) reviewed an updated proposal (Attachment 1) for use of the City Shield by Skechers for a collection of shoes and sneakers. Previously, Liaisons had reviewed and approved use and an agreement on September 12, 2022, which was reviewed and approved by City Council on December 6, 2022. The same terms would apply, amending the agreement with this updated product use and an additional one-year.
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Meeting Date: December 5, 2023
The City Council Liaisons recommended both Skechers’ proposed use of the City Shield, for the attached product designs only, and recommended the company include its best-selling shoe, the “Uno”, as well. After the meeting, Skechers took their recommendation into consideration, and have requested the attached recommended designs, including the “Uno” shoe.
DISCUSSION
Background
Staff receives inquiries from individuals and businesses looking to use the trademarked Beverly Hills Shield on products and merchandise. As requests are received, they are referred to the City’s branding and licensing consultant CMG Worldwide (CMG). 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.
In June 2022, Sketchers requested to use the shield on a series of footwear, and returned to Liaisons on September 12, 2022, with a proposed collection “Skechers x Beverly Hills” (Attachment 2). The limited-edition collection that was proposed then features the Beverly Hills Shield surrounded by sunsets, palm trees, and bold colors on trendy sneakers/slip-on shoes that commemorated Skechers’ California heritage and Beverly Hills.
After Liaison review where it was determined that Sketchers’ proposed use was a good fit for the Shield collaboration, there was some concern that a few of the designs were close to other local businesses’ branding, and the brand determined that they would return with a developed collection featuring Beverly Hills symbols and imagery that honors the City.
“Beverly Hills by Sketchers”
Sketchers presented its updated proposal with new designs and shoe styles to the Liaisons on October 16, 2023 (Attachment 2), which incorporates a spectrum of colors, including a rainbow treatment, and uses of the Shield on a variety of sneakers, slip-on shoes, and boots. These new concepts also include a hangtag for the shoes, and box design for review. This updated collection has been dubbed “Beverly Hills by Sketchers”.
It should be noted that the shield applications requested throughout the proposal are consistently the “vintage” Shield, which appears without its current surrounding filagree that the City uses most often (example in the upper left-hand corner of the first page of this report). Other uses of this vintage Shield in recent years have included the City’s current Holiday banner and marketing designs.
Various versions of a rainbow treatment of the Shield have also been approved in past use, for internal programs such as PRIDE, and an external agreement with Amiri for clothing and hats. This rainbow option presented by Sketchers does vary in its design from both, with the pink border.
While not typical to see the shield in the bright color palette proposed, there have been approvals for the shield in various hues on a variety of clothing in past. Other previously approved collaborative shield uses have also included packaging for makeup, coffee, and other goods, in a variety of color and metallic treatments.
Sketchers’ received Liaisons recommendation that the attached products of shoes and sneakers, and the terms negotiated at the previous Liaison meeting would stand. An Meeting Date: December 5, 2023
amendment request from Skechers to extend the agreement by an additional year was also recommended at the meeting. Additionally, approval of the City Shield on the items would be conditioned upon receiving confirmation of the draft designs before the shoes move into production.
Approved Terms
Under the agreement terms approved by Council in December 2022, the City received 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) (2) the gross invoice price billed to Skechers by the selling factory or agent of the factory for the sales of Goods.
The only requested amendment to the full approved terms that Skechers is requesting is a (1) year extension, after approval of the updated “Beverly Hills by Sketchers” proposal.
Full terms are in the approved Council item from December 6, 2022 (Attachment 2).
FISCAL IMPACT
The terms accepted at the December 6, 2022 City Council meeting would stand; no additional fiscal impact at this time.
Keith Sterling,
Deputy City Manager
Approved By
Attachment 1
Logo Applications
Standard
rainbow
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this version
SKECHERS
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SKECHERS Hang Tag Option
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POP UPS
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Request for SS24
NVY, BLK, ROS, OFWT
SKECHERS
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PNK, BLK, GRY
COZY
WEDGE
COMING SOON:
HPK , LBL, MOC
SKECHERS
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HILLS
1052164
OFWT, LAV, BLK, PNK
COZY
SLIDE
COMING SOON:
HPK
SKECHERS
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1052145
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BLSH
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KEEPSAKES
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SKECHERS
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STACKED
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CSNT, BLK, BLUSH, WWHT
SKECHERS
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Attachment 2
CITY OF BEVERLY HILLS
POLICY AND MANAGEMENT
MEMORANDUM
TO: City Council Liaison/Branding and Licensing Committee FROM: Magdalena Davis, Community Outreach Manager
DATE: October 16, 2023
SUBJECT: Update to a Request for Use of the City Shield by Skechers ATTACHMENT: 1. Sketchers Updated Look Book
2. Report from the September 12, 2022 City Council
Liaison/Branding and Licensing Committee
INTRODUCTION
The City periodically receives inquiries about the use of the trademarked Beverly Hills City Shield.
This report provides the City Council Liaison/Branding and Licensing Committee of Vice Mayor Friedman and Councilmember Nazarian (Liaisons) with an overview of the updated proposal for use of the City Shield by Sketchers for a collection of shoes, boots, and sneakers.
The City Council Liaisons are requested to review the Sketchers’ proposed use of the City Shield, for the attached product designs only. The draft negotiated terms of the agreement presented at the last Liaison meeting on September 12, 2022, will not be applicable at this time, and new terms will be brought back to Liaisons upon product approval.
DISCUSSION
Background
Staff receives inquiries from individuals and businesses looking to use the trademarked Beverly Hills Shield on products and merchandise. As requests are received, they are referred to the City’s branding and licensing consultant CMG Worldwide (CMG). 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. In June 2022, Sketchers requested to use the shield on a series of footwear, and returned to Liaisons on September 12, 2022, with a proposed collection “Skechers x Beverly Hills” (Attachment 2). The limited-edition collection that was proposed then features the Beverly Hills Shield surrounded by sunsets, palm trees, and bold colors on trendy sneakers/slip-on shoes that commemorated Skechers’ California heritage and Beverly Hills.
After Liaison review where it was determined that Sketchers’ proposed use was a good fit for the Shield collaboration, there was some concern that a few of the designs were close to other local businesses’ branding, and the brand determined that they would return with a developed collection featuring Beverly Hills symbols and imagery that honors the City. 2 of 2
“Beverly Hills by Sketchers”
Sketchers has updated this proposal with new designs and shoe styles, which incorporate a spectrum of colors, including a rainbow treatment, and uses of the Shield on a variety of sneakers, slip-on shoes, and boots. These new concepts also include a hangtag for the shoes, and box design for review (Attachment 1). This updated collection has been dubbed “Beverly Hills by Sketchers”.
It should be noted that the shield applications requested throughout the proposal are consistently the “vintage” Shield, which appears without its current surrounding filagree that the City uses most often (example in the upper left-hand corner of the first page of this report). Other uses of this vintage Shield in recent years have included the City’s current Holiday banner and marketing designs.
Various versions of a rainbow treatment of the Shield have also been approved in past use, for internal programs such as PRIDE, and an external agreement with Amiri for clothing and hats.
This rainbow option presented by Sketchers does vary in its design from both, with the pink border.
While not typical to see the shield in the bright color palette proposed, there have been approvals for the shield in various hues on a variety of clothing in past. Other previously approved collaborative shield uses have also included packaging for makeup, coffee, and other goods, in a variety of color and metallic treatments.
Sketchers’ request at this time is for product review and approval only, and the draft terms negotiated at the previous Liaison meeting would not apply at this time. New draft agreement terms would be brought forward after product approval. Additionally, approval of the City Shield on the items would be conditioned upon receiving confirmation of the draft designs before the shoes move into production. The distribution plan for sales of the shoes at Skechers stores and ecommerce globally as well as the marketing plans would be brought back with the proposed terms.
Decision Points for Consideration
• Are Skechers shoe designs, as proposed, an appropriate use of the Beverly Hills Shield? • Any additional considerations or recommendations for Sketchers as they work with CMG to draft an agreement?
FISCAL IMPACT
Agreement terms including any advance and royalties will be brought back to the Liaisons for review, as well as the duration of the agreement.
RECOMMENDATION
Staff requests the the City Council Branding and Licensing Committee review and provide feedback regarding use of the Beverly Hills Shield by Skechers. Based on direction received, the Skechers proposal will return for a review of terms with Liaisons before moving onto Council for approval.
Attachment 3
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
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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.
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.
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Meeting Date: December 6, 2022
DISCUSSION
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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.
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.
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