Is Your Child a Whiz Kid?

Do you have your breakfast with a whiz kid?  If you do, then make sure you apply your business sense to your children’s endeavours if the opportunity arises. It is becoming more common.  Recently we came across a couple of computer-savvy kids who had created products in between school and homework that gained interest from the United States.

Whether it is a website, a computer game or computer programme, or anything else marketable that gains investor interest, it pays to think beyond the lump sum that might be on the table at the time the investor makes their approach. This is because the future earnings from sales could be far more valuable.  You should get a share of that profit.

More importantly, the idea at the heart of the product has significant profit potential if used to develop new future products.  Your whiz kid could turn the $50,000.00 you’re being offered now into millions simply by being able to continue using core aspects of the product in the future.  Unless you protect those ideas the contract might take all options for future use away. Why should the company making that first offer reap all those future opportunities and rewards that stem from your child’s intellectual property?

Often an agreement will be pre-drafted and provided to you when the approach is made.  It pays to read this agreement very carefully, and obtain professional advice regarding the implications of its contents.

You want to retain as much control over the future use of the product as possible and this may require some negotiation. You also want to ensure that any ideas and/or material created in the course of developing the product are retained if possible so that they can be used again by your whiz kid to create something new in the future.  If you are handing over the product in its entirety, negotiate a share of the profit from all future sales.  Also try negotiating an acknowledgment of the source of the intellectual property on the final product.  This will increase the future marketability of your child’s brain-power!

More generally, you want to ensure that the contract is enforceable and that you have some mechanisms in place to monitor the future use of the intellectual property.  You may want to include a reporting provision, perhaps requiring the company to account for the purposes of any profit-share clauses. Also, where a contract is between parties located on opposite sides of the globe it is important to clarify currency, exchange rates and applicable law should a dispute arise.

There is a lot to consider and negotiate.  But despite what you might be led to believe you are in the position of power.  An approach will not be made if there is no value in the creation.  You do not have to give it away to the first person or company with a lump sum offer in hand.  This could be your opportunity to secure your child’s future.  Think carefully, use your good business sense and seek professional advice.