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Episode 14: Common Legal Mistakes Brands Make With Melody Bockelman And Raven Willis, Esq.

AFB 14 | Legal Mistakes

 

When a start-up or indie beauty brand makes legal mistakes, they may get into trouble that’s pretty hard to recover. Luckily, we have two experts and friends here to help with this very informative episode! We are joined by brand-building expert Melody Bockelman, founder of Private Label Insider, and Attorney Raven Willis, owner of the New Millennia Legal Resources. Combining their expertise, they discuss how the trademarking process can save you way more money than you could imagine. They also discuss how to avoid presenting unsubstantiated product claims – as well as FDA’s watchful eye. Melody and Raven even talk about the two main errors emerging brands commit: releasing products without insurance and neglecting the importance of contracts piece. If you’re a business owner, this legal advice is for you!

Listen to the podcast here:

Common Legal Mistakes Brands Make With Melody Bockelman And Raven Willis, Esq.

Legal Pitfalls To Avoid With Contracts And Trademarks Attorney Raven Willis, The Owner Of New Millennia Legal, And Melody Bockelman, Founder Of Private Label Insider.

We have two powerhouse, amazingly knowledgeable women who are experts in their field. We have Melody Bockelman. She’s the Founder of Private Label Insider, which helps startups and small businesses grow and become hugely successful. She’s helped hundreds of brands at this point. We also have Raven Willis, who is the owner of New Millennia Legal Resources. We talked about all things contracts, all pitfalls that small business owners make that you need to avoid, and how to generally run a successful business.

I hope you have a notepad and a pen because we’re going to be taking notes. I was frantically taking notes in my head over this entire episode. Whether you started your own business or you’re thinking about starting your own business, or you’re an influencer, it is so important to read this episode. There are so many things that we don’t understand as people who are not in the legal world that you need to understand and that you need to have a part of your business structure. You have to protect yourself. You have to be your number one advocate or at least find someone who can help you. We’re so excited for you to meet both Raven and Melody on this episode.

They both have a ton of online resources, too, so you can head to PrivateLabelInsider.com. Melody has coaching services and a free online workshop, which is a great place to get you started. Raven also has NewMillenniaLegal.com. Head to those websites and be sure to take a lot of notes because it’s a good one.

Enjoy.

We’re so excited to have our guests on. We have Melody Bockelman and Raven Willis. They are friends, and they are also beasts of titans in their industries. We’re so thrilled to have them on. I had the pleasure of meeting Melody back at Unfiltered Experience through our mutual friend, Daniela Ciocan, the queen of networking herself. Melody has this huge network and has been such an inspiration to me over the years. We connected because we’re both genuine, and we had a great time getting to know each other. We’re so thrilled to have you both on Ambition.

Thank you, Breanna. It was so nice to meet you. When we met, I was like, “I love her.”

I felt the same way. I felt an immediate connection.

Raven is my partner in crime. We had fun together. We were roommates at a hotel event, and then we’ve been besties ever since.

That was one of our questions. How did you guys find each other?

I wasn’t going to end up going to that conference. I didn’t have a room and I was looking for someone to room with because all the rooms are taken. I decided at the last minute, “I’ll go.” Melody chimed in and was like, “You can room with me.” I didn’t know anybody except for maybe one other person at this conference, so I was like, “Fine.” We roomed together, and then it was history at that point.

What conference was it?

It was an entrepreneurship conference, studying our craft.

AFB 14 | Legal Mistakes

Legal Mistakes: COVID-19 killed retail, and it is a blessing for many small entrepreneurs because it leveled the playing field.

 

I know you are so knowledgeable in your respective fields. For any entrepreneurs and business owners reading, I would love to jump right in. Melody, for entrepreneurs that want to start their own business let’s say they have a great idea and they want to get it on shelf, what does that timeline realistically look like? What are some of the common pitfalls that business owners aren’t expecting?

I help beauty entrepreneurs start their own brands, skincare, haircare, makeup. Shelves are usually the dream. We want to hit Sephoras and also Targets and stuff, but there’s a lot of steps that happen in between that. The product development phase should take 9 to 12 months if it’s a well-thought-out brand. Of course, Raven does trademarks. There’s a lot of things that have to happen before you’re shelf-ready. Not only to develop a product, but you have to learn to market it. I often tell people, “If Sephora was to call you tomorrow, you’re probably not ready to handle it.”

The amount of things that they need to be able to support store sales and the skillsets aren’t there yet. Realistically, give yourself two years in your brand learning how to sell your products, how your customers respond to it, and what doesn’t sell and what does sell, and then think about going into shelves or going into retail. One thing that we saw during COVID, which was interesting, was that retail died. It’s a blessing in a lot of ways for a lot of small entrepreneurs because it leveled the playing field. I love retail. It’s a great place for people, but you can do well and have a strong business. Before you get there, definitely give yourself at least two years.

Do entrepreneurs ever come to you, and you can say, “I don’t see this idea working because your audience isn’t targeted enough.” How do you know when something is going to work?

When it’s niched down, when it’s something that is a skincare line for 20 to 50-year-old, I get nervous about that. I’m like, “I had that money.” We don’t want to spend $20 on a moisturizer anymore. We want to spend $60 or $80 or whatever. Niche down is important. They’ve got to understand. You can go deep in that niche. One of our bestselling brands is a brand that sells to Latinas here in America. Their whole website is in Spanish, but they look American. It’s a great way. If you niche down, you can serve a lot more people.

Since COVID, I know a lot of people aren’t wearing as much makeup. What trends are you seeing in the industry in general?

Skincare is huge. Also, haircare, doing your own home hair, home colors, home nails, and all the things at home. Lashes are big. Of course, you do see the matte lipsticks are doing better. I’m predicting that there’s going to be an upswing the exact opposite way that people are going to be out there beating their faces again. “I can take this darn mask off.” That’s my thought about it.

For both of you, how were your businesses affected during the pandemic as well?

Raven, how was your business affected?

It shifted quite a bit. Before, I saw a lot of activity in trademarking. Trademarking is more of a proactive type of thing where you don’t automatically see a lot of return immediately on that investment. I was doing a lot of that business before, but then it shifted to contracts and terms and conditions because then, everyone went into a defensive mode. Certain things were dying quickly and other parts of businesses were growing exponentially, so it was crazy. Everybody’s like, “What’s going on?”

At that point, in my opinion, people were understanding the value in protecting themselves and making sure like, “This contract is not good. People are asking for returns and I have no way to not give them one or to fight this charge back.” That’s a lot of business picked up in that area. It didn’t slow down for me. It didn’t get a whole lot better, but it did definitely shift. A lot of my smaller clients went away and dried out, but my clients who were bigger, especially the beauty brand clients, exploded. That’s when they were like, “I need this.” It shifted completely.

Beauty exploded over COVID so the people that were thinking about starting a brand could post a picture on their Instagram with 300 followers and make sales that day. Raven’s right about the terms and conditions because no one knew how to handle returns with COVID. If somebody buys a product, do you let them send it back? Is that safe? Also, there was an upswing of new entrepreneurs coming into the market.

In terms of people, I have a course of teaching people how to create brands. We doubled our sales and courses because there are so many new entrepreneurs that want to start a brand or people that had time. They’re now working from home, and they’re like, “I need to have something online.” That went up. The legal issues did multiply in a lot of other ways because not only did we have issues with direct-to-consumer customers, but also the supply chain was affected.

I love the network you’ve created. I love that people are bouncing ideas off of each other in your Facebook group. Everyone who’s reading at home, if you’re on the Facebook group, you can go ahead and pitch six different logos and say which ones you guys better. You can find a fulfillment center. You can find any service that you’re looking for. I love how you’ve created such a well-rounded group of people. You know the best people, and there are people who I still stay in touch with who I’ve met through you. How did you even start that network?

You’re a marketer and a social media queen, so you understand this. My business is called Private Label Insider, but I used to call the group was Private Label Accountability. Nobody connected with that all, but they resonate with Beauty Business Entrepreneurs. One of my first coaches taught me that connection is the foundation of business, so I spent a lot of time connecting with relationships. Raven and I do a lot of business together. She’s my lawyer, and she does all my client’s work. I love working with people that one, has the same values as I do and two, serve their customers at the same level. I love having a connection with all of these amazing people because we are able to serve more people together. When you can get that community, that’s all it is. It’s just a community of like-minded people, like, “Am I doing this right?”

I have to add. This is so important. Melody and I have learned this in my business. When you do good business, you attract the same. Melody is good at what she does. Her testimonials speak for themselves, and the folks in her group speak for themselves. Whenever she makes a referral to me, they’re the best clients for me. I love her girls. Honestly, her group is the only group now that I am active in other than my own.

I do not do anything near what I do for Melody for anybody else because she has such a good work ethic, a good product, and does good business. She’s on the up and up. She’s not trying to pull one over on people. I’m saying this and it would seem like this would be normal, but it is not. She focuses on value as opposed to taking someone’s money. When you do that and you have such a good reputation, it attracts the best. I love working with her and her clients. It makes you attract people who are super value-added individuals and who have that same level of hustle and the same quality of services.

AFB 14 | Legal Mistakes

Legal Mistakes: Businesses go bankrupt because of a bad contract, not fulfilling their obligations, or signing something they don’t understand.

 

It’s so empowering. It like, “This person is getting me so motivated.” Being able to see and have that trail even on social media. I know that you’re doing so much more behind the scenes. It’s so empowering to see the group that you’ve created. People do come to you and they pour their souls out like, “What can we do here?” You create this beautiful brand with them. I love that you’re saying that because you do find the most genuine people. You find amazing people to work with and that says a lot about you. That’s what draws us to you as well. I love that you guys are on the same page that way, too. Karen and I have that same understanding of our company.

It’s so hard to find not a trustworthy friend but a trustworthy business partner. We know people who have gotten burned in relationships in the past, so it takes the next level of trust.

You are all making me blush. Thank you, guys. I love it. I would imagine none of us here were handed a silver spoon. We’ve all ground and hustled to get to where we are. Every single one of us was single moms or women in business. I feel like it’s more than the dollar amount. It’s great to make money, don’t get me wrong. Nobody wants to be poor anymore. On the same hand to that, it’s so cool to help somebody else say, “Because of you, this contract, this social media thing, my business has exploded.” That is the biggest reward, for me at least, in this work that we do. I’m not a beauty junkie. People are always surprised. I don’t even know how to wear lashes. Raven is the one that could do her makeup well.

I love makeup. I didn’t put any makeup on.

You’re beautiful, by the way.

You’re such a natural beauty.

Thank you. I do have eyeliner on and mascara. That’s it. Normally, I love makeup and I’m not good at hair. I’m totally into beauty. I have so many products. I probably have in my bathroom over $15,000 worth of haircare products and cosmetics.

I believe it. I’m a total beauty junkie, too. We love makeup. We love the new palette launches. We’re totally there. Karen and I’s background is in publishing. We came from the magazine world where we would get a rotating door of PR on our desk every single day. We still have some of those products to this day. We’ve learned so much about beauty from being on that side of it, so we can definitely relate.

Back when beauty editors were more of the authority, now influencers, everyone is looking to get the latest scoop, tips, and ideas.

I don’t know if you guys know this, but influencers in the beauty space increased their value. People were watching influencers 18% more during COVID, which is interesting to me. You would think, “Who cares what makeup she uses?” We had time.

For me, it’s more important to put on more makeup being on camera and being on Zooms than I would when I’m in person. I wear more makeup when I’m in these types of meetings than I would be in a day-to-day situation because for whatever reason, your eyes pick up less when you’re face-to-face than a camera. Camera picks up everything. I’m like, “I thought I put some concealer on that.”

I use to touch up a little. I don’t touch it up all the way up depending on how I’m looking at day. It’s been so interesting to do business this way. It’s a breath of fresh air for myself because I am a homebody. I am a home office-type of lady. When we started the company, one of our things was I was exhausted and so was Karen from commuting to LA every single day. I was driving five hours in my car every single day for several years in that publishing position. It burnt me out and it killed my body.

My whole thing is that you can get more done as a creative at home. I’m wasting time having to drive five hours of my day. We wanted it to be this remote hybrid position. Of course, we do have our studio now and we come in several times a week into the studio, but other than that, it’s on the honor system. It’s a remote position. For us, the Zoom thing and not having to cruise up to LA to meet with our clients and do it via Zoom has been refreshing for us. I’m not sure about you, guys.

I love it. I’m a total introvert homebody. I’m an extrovert-introvert. I’m great with people. I like to mingle but I love being at home, in solitude, and totally by myself for extended periods of time.

You would have to since you’re this contract guru and you need a lot of concentration to do that.

I have my little happy world in my head. I’m the funniest, most famous, most awesome person in my head. My world is a happy world. I need all that concentration. It does help me work better because it’s like, “Everything I need is all in here. Just leave me alone, everybody.” It is conducive for what it is that I do because it is mentally intensive when I write my contracts for my clients. Trademarking is less mentally intensive at least it’s not quite as extended. Writing a contract takes 10,000 times more work. Even still, it’s great. I love being at home. I like boring and my job is boring, which is perfect.

We were talking about how the beauty industry is booming. There’s a new company popping up every second of the day. With so many businesses starting, I’m sure that you’ve had some brands come up to you that have their company that hasn’t trademarked right away. How important is it to trademark?

Trademarking is not as important as contracts, how you deal with other businesses, the agreements that you make, and the terms and conditions under which you sell to your clients or customers. Those are definitely the most important thing. Businesses generally don’t go bankrupt because of a trademark issue. Businesses go bankrupt because of a bad contract, them not fulfilling their obligations, or they sign something and they didn’t know what they were signing, and somebody’s taking them for their money. That’s the most important thing.

Trademarking is important because the worst thing, and I see this happen in the beauty brand business arena, is folks spend a lot of money on labels, packaging, design, and things like that. They pour tens of thousands of dollars into it, but then they find out the name is not available and it infringes on somebody else’s trademark. That sucks. That’s wrong. What happens in those instances is now you have to rebrand and that’s the worst. It’s expensive, and then you have to redo your packaging. It’s not like you’re going to go bankrupt type of thing. It’s a hurry up and change it before somebody else sees you and send you a cease and desist. At that point, you could be liable.

It is important. I do recommend, especially for folks that Melody sends to me, to start the trademarking process when you start your launch. Start the trademarking process at the beginning so that way, at the end of the year, when you’re ready to launch, your trademark will be in hand and you’ll have everything. It’s not cheap. My services are $2,600. There are other trademark lawyers who are more expensive and there are others that are less. Normally, a good lawyer is going to cost right around the $2,000 range, so it’s not cheap. However, it is important if you look at it from the standpoint of, “Do you want to spend $10,000 or $15,000 on labels and then have to change everything?” It’s an investment, so it’s important.

Is there a fee on top of the attorney fee to trademark?

That fee includes the application fees for the USPTO. It does get more expensive if we have to reply to a refusal, if the USPTO has questions, or if it’s a weaker trademark. Those usually tend to be more expensive if the process is drawn out because somebody else opposed it. Generally speaking, if we have smooth sailing, no problems, and no issues, $2,600 is the only thing that they end up paying and it includes everything.

I decided to take my advice. I don’t have a trademark, and somebody I started using ThePrivateLabelInsider.com. I texted Raven, and I’m like, “I already told you we need to get this.” You can get a cease and desist, but thankfully, that company stopped promoting and went out of business. It’s important. You don’t think about it, and you’re like, “No, I’m fine. No one else knows. It’s not a problem,” but it can become a problem. What I’ve learned from Raven is that it’s a real problem if you see it and you don’t do anything about it, then you’re giving permission.

Trademarking is a self-policing type of thing. There is no trademark police out there protecting citizens against other eco-movers. It’s you, so you have to protect your rights. If you don’t, then you lose the right to go after them later because you are essentially giving them permission, so to speak.

AFB 14 | Legal Mistakes

Legal Mistakes: There’s no trademark police out there protecting citizens against evildoers. You have to protect your rights.

 

The thing, too is that people don’t know where to start with that. They’ll be like, “You get to contact an attorney.” That’s where you lose interest right there. People are like, “We’re not going to do our own research,” a lot of times. The fact that this is such a niche for you and you’re in this industry, I will be emailing you because I already have a list of sidebar questions and people who do need that help. I was seeing if that was something that was important. Even service-based companies have to do it.

I want to talk about two things. As service-based companies, I learned this from Raven, we need better contracts. I cannot tell you how many times I’ve had incidences happen where I didn’t have that laid out in my contract. I had a lady and we started working together in 2018. We have a six-month coaching contract, but she didn’t have enough money to finish her project. She came back in 2021 wanting to pick up and after we’ve gone through the six months, I didn’t have a contract at that time on my coaching programs. I have one because Raven has written me one, which was well worth the investment. Raven taught me this as well. She said, “If anybody won’t sign your contract, don’t do business with them. They don’t mean well by you.” That’s a hard lesson because my basic belief about people is that people aren’t good. Raven is like, “Nope.”

Your basic beliefs should be the opposite. You are good and everyone else is out to get you. Be wonderful. You have to have a good contract to preserve your innocence so you can operate happily because you know you have this force field around you. That’s how you have to operate.

It’s so powerful because I didn’t know all of this. I thought, “A lawyer is when you get into trouble,” or whatever. I read and I text a lot because as your business grows, the things that you don’t think that you’re going to need, you absolutely need. Whether that’s a beauty brand or service provider, you need good contracts because you’re going to have that client that comes back four years later and says, “Let’s finish.”

To add to that, here’s the thing about service providers and it’s so important because I do this as well. You have to keep your contract updated. I tell folks it’s a living document. I update my contract for my legal services all the time. Almost for every new client, I’m adding something else in there because I’m like, “That was a close call. Let me go ahead and put that in my contract.” When you have these lessons learned or near misses, you notice that you need to go and update your agreement.

It’s never going to be perfect but at the same time, you’re always going to be learning and evolving. That is the most important thing about a service provider’s contract because what we do is not like a product where you have a hard standard process and procedure and you get the same thing every single time. What we do isn’t like that, so you do have to leave it a little bit open to give yourself some wiggle room but then, when you see that there’s a gap in there that opens you up to liability, you got to close that gap and you have to keep it updated. That’s the important part about a service provider’s agreement.

Have you both also had to deal with brands who made unsubstantiated claims and got in trouble for it?

Yes. Melody and I were on here because we’re friends and we do a lot of work together. I’m good with understanding what the FDA says and won’t say, and we’re good about making claims. I’m at the gray line and I’ll tell the line a little bit but Raven is like, “I have to defend this in front of the FDA that we’re not doing it.” Let’s talk about hair oil. The problem is that new brand owners will say, “Everybody else is saying your hair is going to grow.” The FDA doesn’t recognize hair growth oil. You showing those before and afters, you’re making a medical claim. We had a mutual client who got into trouble with FDA over that stuff. If you go out there and do something because everyone else is doing it, you’re opening yourself up to the FDA knocking on your door.

Here’s an important part that I want to make. You don’t see major brands like L’Oréal making these types of claims. What happens is you have these smaller businesses and they’re like, “My product is better because it does these things. These bigger brands don’t do it because they don’t say it.” The reason why these bigger brands don’t make these same types of claims that you see the smaller brands doing is because they’ve learned their lesson.

If you know that your major competitor or a brand that you look up to is not saying what you’re saying on your label, then that’s a cue that you should not be saying it either. Just because they haven’t caught you, does not mean that they won’t. Here’s one other thing that I’ve told clients, “Your competitor can take your label and submit a claim to the FDA.” That’s a huge competitive advantage that sometimes, I might recommend to my clients. If your competitor sees that you’re making these claims that are unsubstantiated, they can absolutely report you. If there’s a complaint that the FDA and FTC receive because the FTC governs it, too. Now they have to look into it, so it’s better to not do it.

What is the repercussion for that? Is there an example you can share?

I can tell you from personal experience. In college, I had my own eCommerce business and I sold bioidentical hormones such as progesterone cream, vaginal cream, menopause products, and perimenopause products. All over my website, it was like, “Do you have vaginal dryness?” The FDA comes in and sweeps our industry. They show up at my dorm and they give me a letter. They give me time to clean up. Not only were they now inspecting my claims but they are now inspecting my workspace. They limit my ability to buy ads, so my business has stopped because I can’t say now bioidentical hormones because that’s a medical claim. I’m only able to sell to my existing clients and my doctors’ networks but we couldn’t get new clients at all. Because I cleaned up on the spot, there were no monetary repercussions. Some of my industry colleagues would not clean up and they got $250,000 fines.

One guy went toe-to-toe with the FDA and FTC and he’s not able to legally sell in the US for 25 years. He was showing all this medical journey and he was like, “Are you in his right to sell these products?” They are alright and they do work. I love progesterone cream. If you’re having hormone imbalances, talk to your doctor, but they’re fantastic but the FDA doesn’t recognize them as a drug. He can’t sell in the health and beauty category for 25 years. He was 75 at the time, so do the math. It’s serious. The mistake that small entrepreneurs make is like, “They’re not going to catch me. I’m not on their radar. What time do they show up?” They know your mom or your dad. They got your whole website and they know everything about you. They’re coming to deliver the letter and/or inspect you. That is a painful experience.

One other thing I want to say is even if your product does those things that you’re saying, you still can’t say it. People think that the truth is on their side and that will allow them to say it. No, not unless you’ve gone through the process that the FDA has clearly stated for your product to be marketed as a drug, you cannot make those types of drug claims. We all know there are certain things that grow hair. Sulfur, saw palmetto, collagen, and all the stuff that grows hair. Even if you have all that stuff in your product, you cannot say for a hair oil that it grows hair. The regulations for supplements are a lot more lax than it is for cosmetics. You can say a little bit more if it’s a supplement but if it’s an oil, it doesn’t matter if it does it. I don’t care if you grow $100 bills out of your scalp. You can’t say it.

Do you have to say promotes or helps with or could help?

Not hair growth, but you could say lengthen or strengthen.

Make it appear longer.

You can’t say grow because grow is tied to nonoxynol-9, which is the only ingredient that the FDA recognizes as a hair grower. There’s a lot of nuances. From my perspective as a brand developer, I spend a lot of time reading this stuff to advise my clients, but 99% of them will go out and do whatever they want to do. We have in our contract, “We provide you a list of what not to say. That’s where we stand. You’re responsible after that.” Unfortunately, they call me in the middle of the night, and then I have to call Raven, and then Raven has to defend in front of the FDA sort of stuff.

You don’t have to listen to me either, so I’m like, “I’ll take your money either way. Either you can give it to me now or you can give it to me later,” but I don’t litigate.

Is there some gray area? What about for skincare? Almost every cosmetics brand, too says, “For all skin types.” Can they legally say that?

Yeah. What we get concerned about is if it’s called a structure-function claim, medical claim, or if you quantify something. If it says, “I’m going to clear your skin in seven days,” but they haven’t done any studies, there are clinical studies, and consumer says they haven’t done any studies, then they can’t say that. Most products probably are all skin types. Those claims are benign, but if it’s a quantifiable claim, then it’s also like the medical claim, so we mostly look for it.

One common thing you see in the skin is like, “Stimulates the production of collagen.” That’s a medical claim. You see it everywhere. That’s where brands get caught up because they’re like, “So-and-so says it.” There’s a lot of nuances to building a brand. Not to discourage anybody that’s reading, but toe the line. You do have to put, “May reduce the appearance of.” The FDA is clear on their labeling laws. If it’s a beauty product, it’s designed to beautify. “It may reduce the appearance of fine lines and wrinkles.”

The appearance is great. I always say to change it from it causes a particular thing to happen, change it to the appearance of it may be changed. Saying your hair may appear longer does that mean your hair is longer or it caused your hair to grow. It means that now it may look longer because it grew. You’re not saying that it causes it to grow. It sounds ridiculous but now that we’re talking about this, if you go to these major brands and you look at their labels and the claims they make, you’d be like, “That’s why they say that.” They can’t say it will grow your hair even though it might. A lot of times, the products do cause these physiological changes but you can’t claim that because if you do, it falls into the drug category and that’s a whole another beast that you don’t want to be in.

What is the process for getting that sorted with the FDA? Would it be through you? Is this something that you would streamline for the client? What can people do?

AFB 14 | Legal Mistakes

Legal Mistakes: If you do something because everyone else is doing it, you’re just opening yourself up to the FDA knocking on your door.

 

It depends on the problem and the claim. Normally, stop doing what you’re doing. Stop making these claims, clear out your labels, change your labels, and pay a fine normally. A lot of times, it’s not even worth fighting about like what Melody was saying. A lot of times, if you go that route, you will open yourself up to other things because you’ll say something, inevitably, that’s going to make them start digging even more into this other area, and then it makes it worse. A lot of times, I’m like, “Let’s pay the fine and stop doing these things, stop making these claims, clean up your labels, and let’s move on.”

I always teach people that your marketing is an extension of your labels. We look at it as a grocery store. What’s on your bottle is part of it but also what’s on your website, your testimonials, your social media. All the things are what the FDA looks at. By the time they come to your house, they’ve watched every YouTube video, they’ll point out the minute of when you said something. They look at everything. It’s not to discourage you, guys. Be clean about it. Say beautifying claims. There are so many fun things you can do with skincare, haircare, and makeup. A lot of brands are making a ridiculous amount of money.
Be clean about it because you can lose your whole business over it. As I said, work one thing.

Part of what I do is I receive contracts, sometimes several times a day, attached with briefs for our talent. The briefs are extensive. It’s all legal jargon. Everybody is trying to protect their brands. I understand. I take the brief and I condense it into one little paragraph text that I send to the influencer. I get it now. I get why they’re doing that. Sometimes I’m like, “No one is going to read this. Who’s going to read this other than a manager?”

I’m glad you read those everything you sign.

Even their marketing materials and even an influencer can be taken down for having a false claim or being responsible for taking a brand down if they’re not providing what they should be providing in their briefs.

It’s a scarier thing. I didn’t even think about it from the influencers’ perspective. If they’re going out, they’re like, “It cleared my skin in seven days.” They’re marketing.

They’re being told what to do. As we were saying before, you’re not seeing L’Oréal making these claims or anything. With the indie brands, coming through that a little bit more and be like, “Is this okay? Is this going to get anybody any trouble?” A lot is going on with influencer marketing, too, on the legal side of things. It’s all over the place too. We have the new up and coming platform, the big huge platform, which is TikTok. There are more things tied to that as well. They’re sending contracts through the TikTok back end where an influencer can sign to do a project with the brand directly through DMs. I’m like, “Can you screenshot that to me?”

We’re not even reading it. They’re signing it and not knowing necessarily every caution. I didn’t understand the value of a lawyer until I started hanging out and writing for us.

That’s the whole thing too. On our end with our brands, we make sure that we have a nice model release form for all the posts that we’re posting. If we’re working with an influencer, we make sure that everybody is on the same level and understands that this could be used for maybe ads or be reposted on our page to make sure that our brands are protected. That’s something that we implemented for all our brands. We do recommend that for any brands who are marketing and are on social media. You have to do that for your brand. On top of that, our brand managers will send a DM making sure that they have the okay to repost something. It protects everybody.

I have a lot of questions about working with influencers. We should connect offline.

I have a lot of questions about this too. This is so insightful. It’s not something that people completely grasp because they’re in the weeds. They’re trying to build their businesses. They’re keeping their heads down. There’s so much more that needs to come into play. Even myself included, I can say that to the extent of the trademarking process for us has been, I searched for the trademarks, I paid LegalZoom to search. They sent it back to me and that’s where we’re at.

This is what I tell folks and my clients. You shouldn’t feel bad about not knowing these things because you’re not a lawyer. I don’t expect non-lawyers to know these lawyerly things. However, that’s why it’s important that you have people in your circle and you have a lawyer around that you can access who understands these types of things. It’s good to have at least a lawyer that has a reasonable amount of knowledge in a lot of different areas of business. They need to know something about trademarks, contracts, and something about these types of labels in the FDA.

My law firm focuses almost exclusively on trademarking and contracts. I’ve been doing way more type of beauty brand stuff with Melody’s clients. It’s the third piece of my law firm. A lot of lawyers may not know as much about one area. At least, a business lawyer will know enough to at least send you in the right direction and be able to help find another lawyer who is more knowledgeable in an area that they may not be. It’s important to have a lawyer near you so at least they can help you ask the right questions and be thinking in the right direction. That’s one of the things where Melody was like, “I didn’t even realize it. I didn’t know what I didn’t know until I came to you.”

What are some of the biggest legal mistakes that startups make? I know we talked about trademarking. What are a lot of questions that you get from startups who didn’t realize, “I should have involved a lawyer in this process now I’m this far into it and I didn’t?”

For me, the thing I see the most in addition to trademarking labels is not having insurance for their products. People have reactions to things. We’re chemically sensitive in our environment. These are a lot of chemicals, so you don’t know. I had one client, and one of her client’s hair fell out. If she had product liability insurance, then it’s not an issue at all. It’s only $1,000 a year. It’s $100 a month to protect yourself.

Do people do this through LegalZoom?

No. Even your car insurance offers those liability policies. Even service providers need liability policies. If we have events, we don’t think about those things. My main philosophy from a brand’s perspective is if the client wants to return a product, just say, “No problem.” Return it and move on instead of fighting with them over $30, $40, $50. That’s going to cost you a lot more when you file a claim against that insurance company. What are your thoughts on that?

Probably one of the biggest mistakes is the contract piece. People do not understand how important a contract is because you get to dictate the conditions under which you sell to somebody. You get to change those terms if you want to. You don’t have to sell to any person. A lot of times, this is prevalent with more of my service providers and those who sell digital products and things like that you have people who buy from you so that they can dissect whatever it is that you’re offering. They then can compete with you and then they sell it. I see this a lot with courses, service providers, even products.

AFB 14 | Legal Mistakes

Legal Mistakes: If bigger brands are not saying what you’re saying on your label, that’s a cue that you should not be saying it either.

 

I have a second business where my partner and I manufacture our hydrogen peroxide-based cleaning products. Even on my website for my contract templates, for those other products, I have a clause in there saying, “The only reason that we’re selling to you is that you are agreeing that you are an end-user and you are not purchasing it for any type of regulatory. You’re not purchasing it as a competitor. You’re not going to dissect it. You are agreeing that you will not create any type of derivative product.” I lock it down. There are a lot of nefarious types of activities that people do that you would be surprised about.

It’s important that you put a lot of thought into these types of things and the conditions under which you’re going to sell to the person what it is that you expect. Not just that, but also delivering on the thing that you say that you’re going to do. People get in trouble as much for not doing their part as they get in trouble from somebody else doing them wrong. We are our own worst enemy a lot of times. Focusing on that and making sure that all of that is clear in your contracts, online terms, and conditions. If you’re a service provider or you have a physical contract that they signed in that area, that’s the biggest thing that people oversee. It’s important and people don’t give it the attention that they need to.

Do people come to you with specifics that they need help with or people come to you and they’re like, “I don’t know what I need help with?” You oversee what they do and then you’re able to assess it from there. Is that how it’s done?

Absolutely. I was having this conversation with my brother. There are different levels of service providers. Some service providers are like, “What do you want me to do?” Other service providers are like, “This is what you need to do.” I’m like, “This is what you need to do.” Normally, what I do is I get a feel for what’s going on, what was the problem that brought you to me, and what are some of the things that you’re scared of happening? I take a look at their business and I see where they’re going. I do my assessment for it, “Here’s where I feel like this is a risky area,” and then I provide the finished product.

When I write a contract for a client, they give me little input. I might use their current agreement to see where they’re going. I take a look at their services, marketing materials, everything, and then I create what it is based on everything that I see. If I have another lawyer doing it too, we create what we feel is good for them. I don’t depend on my clients to tell me what they need because they don’t know what they need. They don’t even know the right questions to ask. It’s my job to be the expert. I don’t depend on my clients to tell me every single thing because that would be ridiculous.

I had a guest expert. She’s an influencer on one of my membership sites. This woman went and took my ideas, took my content, and created a course right after that. Raven, I told her about it. She said, “About those terms and conditions, I need it for guests as well.”

You only know what you know. It’s not like you should feel bad for not doing this upfront. When you see that this has happened, it’s like, “Now we need to go and update those terms.”

Before you even have problems, you should do it.

For everyone reading, I hope that this is insightful for you and this motivates you to take care of things because I was in the impression that I want to be prepared. I don’t want to be blindsided with anything.

For me, it was a perspective. I never thought anybody would do that. I don’t normally work with those people. Normally, professionals take their ideas.

I have a different opinion of people. My philosophy is anybody is capable of anything under the right conditions. I don’t care what it is and who it is. Everybody is capable of the worst things if their back is up against the wall, they need the money, or whatever. The way that I operate is I’m going to assume that you have the potential to do something bad. Normally, what keeps people from doing these things is if the pain of them doing it is worse than the pain of them not doing it, so I make sure that I keep the pain worse for them doing it. The way that you do that is through the contract and making sure that it’s going to be enforceable but then also financially enforceable.

I have a lot of terms that I build into my agreements like arbitration. That way, the question isn’t going to be well, “Do I want to spend $15,000, $20,000 taking them to court? Should I go ahead and eat this $8,000?” Nope, I’m not eating $8,000 because I wrote into this contract and arbitration terms. I’m going to take you and get a judgment probably for a couple of $100 and it’s going to happen pretty quickly making sure that you keep your best interests and their best interest.

It’s the real side of the business that we don’t talk about. Have you guys watched Shrek? In the beauty business, the fairy godmother is out here and then there’s the factory behind it. That’s the real thing. You got the lawyers, the publishers, and the managers. It’s so much more than what the consumer sees at the end of the day.

In some respects, we’ve all been burned once or twice too. As you were saying, someone watched one of your courses and then went, copied it, and created their own. We’ve had clients who signed a contract for a year and then wanted to pull out 1 or 2 months early. We didn’t take any legal action against that but it has happened.

Raven and I corner them and be like, “No. I wrote this in.”

Here’s another thing. It’s important to have someone write your contracts who are good at writing contracts. A lot of lawyers look at it like, “I can do this from home. People don’t want to go into an office now.” Every business needs a contract. They jump into doing contracts and their contracts are terrible. The way that a contract is written is as important as having one in place. That’s why it’s important that it’s obviously number one enforceable and you can hold people accountable but then it’s not going to cost you an arm and leg to enforce it.

That’s why you have to write these terms in there very specifically in a way so that you’re not going to be like, “I have to go ahead and eat this $10,000 cost or they took me for $20,000 because it’s going to cost me $25,000 to litigate it.” A bunch of times, it’s not going to be worth it. That’s what you don’t want. It’s important to have, not just any contract but a well-written contract. It’s not that hard. I’ve been doing it for so long. I eat, sleep, and breathe this stuff. Have someone who knows what they’re doing and they’re not jumping into it like, “I do Family Law over here. Here’s a contract for you.” You don’t want someone who practices business and contracts.

That makes a lot of sense. I was catching up on my friend. She has worked for Beauty Launchpad Magazine for a long time. She’s plugged in, especially in the professional side of the beauty industry and she was saying that the next two states that are going to become the beauty states are Texas and Tennessee. Since you’re both either full-time in Texas or part-time in Texas, what have you guys been seeing? Have you been seeing that on your end?

I see a lot of manufacturers popping up that I didn’t even realize were here. Both of us are based in Texas. I love it here. It’s got so much, number one, land. Number two, it’s like the Wild Wild West. We don’t have any state income taxes but we do have sales tax. It’s an affordable place. There’s a lot of labor. I’m finding that there are a lot of manufacturers that are based here in Texas on top of the fact that it’s central, so shipping isn’t that expensive plus you can ship products out in it reaches almost anywhere in the United States within 2 or 3 days. I’ve noticed a lot of opportunity in that area for my cleaning products business. I love it. It’s great.

Did you mean on the trend side or did you mean the business side of beauty?

The business side.

Texas is a hub for manufacturers and Tennessee as well. There’s an upswing of manufacturers coming up in Tennessee but then there’s also the fulfillment centers. There are also professionals. When you’re based out of Dallas, you can fly almost anywhere. Funny enough, Raven and I are ten hours apart in Texas. She’s in Dallas, and I’m down South where Elon Musk built his Starship City. I want to start my manufacturing plant. That’s what she’s talking about. We’re working on it. There’s such a need. There’s a shortage in the industry for small manufacturers who deal with small clients. I don’t mind working with small entrepreneurs as long as they’re educated in how it works, which is what I do. One, there’s a shortage of small ones. Two, all the big ones are tied up. Our business doubled or tripled in COVID. They can’t get their products out. I’m frustrated for my clients. Even Austin has some manufacturing as well.

Another thing that you’re seeing as well as conglomerates are coming up and not just the L’Oréals and Estée Lauders but a lot of these marketers like the Amazon brands. The people that have figured out digital marketing are both consuming other brands. They’re acquiring other brands, but they’re also acquiring their supply chain. They’re also buying their manufacturers out, which is then taking those manufacturers out of play for the smaller manufacturer people. Why wouldn’t you? If I’m Pacifica Naturals, why wouldn’t I want to buy my competitors and their supply chains? It makes a lot of sense. If you’re a small brand and you’re like, “Why can’t I get our products out?” That’s what’s happening. There’s a race to acquiring brands right now.

You were talking about having a niche, what a niche that is to have a manufacturing plant for smaller indie brands who are doing smaller volume. I love that.

I’ve been toying with the idea of also having an area where they can come in and mix and build themselves, almost like a shared kitchen too. I don’t know how we would logistically work that out. I know there’s one place in Asheville, North Carolina that does it. Raven has a brand. Raven and I are talking about her manufacturing. She was like, “What are you up and running? I’m coming over.” Imagine if Raven can bring her team in and use the equipment because the equipment is the biggest expense, and then film herself uses our labor costs and then go about her day. Ideally, we’d have a fulfillment center as well but that’s a whole another business model to learn.

To be real with you, I didn’t know much about fulfillment centers until I met you. I would also love to get a breakdown of what you provide when people come to you, and they’re like, “I have this business.” What is that process? What are you able to help them with?

We do it all. If you said, “I want to start my own brand.” We come in and we help you name it. We check the trademark and then we send you over to Raven to get your trademark started. Those are our first steps. We then go through the R&D section with our chemist and we get it developed. We’re doing lashes, supplement line for a doctor, haircare, I always do hair, and a couple of skincare lines. People come in and we find the right manufacturing fit for them. I have a lot of relationships in the industry. We find the right partner, we go through the R&D side, we put our other hat on, and we work on the marketing side of it. I love marketing more than anything.

We’ll work on a launch plan. We’ll partner with people like you to get the influencers involved. Influencers and beauty are necessary. It can change your business. We work with some of our ad specialists and we partner with the right people. We have Amazon specialists we send people to. They then come out with a total package for a business and they kill it every single time. If they’re capitalized, I will say that there’s a misconception that you can bootstrap business. It’s an eCommerce business. You have to buy inventory and buy ads. You got to have a team. You have to be capitalized. It’s not like, “I don’t need you to have $20,000 now. I need you to have $5,000 then have $5,000 next month and the following month.” We need to constantly invest in it. We take them from start to finish. I love the lives that get changed. It’s great.

People can sign up for your free workshop and that’s the first great step to get them started. How did you both know that your passion and mission is helping startups and small businesses fulfill their dreams?

For myself, I was a single mom. I was working a corporate job and I hated it. I would drive to work and cry. I started this business almost as an extension of that job. I was blogging. My first client was Cora tampons. I helped Molly start her brand. She didn’t understand how tampons are a Class 2 medical device. She paid me $125. Those tampons you see on Target, she’s doing great work. That was my first paid client. She was 25 or 26 at that time. There are probably more people out there. I can tell you there are so many stories of people that I’ve worked alongside who have started their brand, financially changed their lives, and impacted a lot of people in the world.

For me, my primary mission is financial freedom for myself and my family but also to teach other people that this is a tool that you can use to create a life you love. That’s what drives me and wakes me up every day. I’m not a beauty junkie. Don’t hit me up and be like, “Why don’t you like makeup?” I don’t know how to use it. I appreciate makeup artists. I don’t even have a style. I had to hire a stylist. It’s not my skillset. I’m an economist. That’s my background. What motivates me is hearing, “I have a client in meetings.” They’re doing over $300,000 a month. He’s in kidney failure. He was in the hospital and he’s like, “I don’t care if I die. My family is set. We make some money.” I’m glad for them. That’s the awesome part of it. That’s my side of it. Raven, how about you?

AFB 14 | Legal Mistakes

Legal Mistakes: People get in trouble just as much for not doing their part as from somebody else doing them wrong.

 

The thing that helps motivate me and the thing that I love about what it is that I do is, number one, I feel like the smaller businesses are innovative. I love it. I am an entrepreneur first who happens to be a lawyer. I love business. I eat, sleep, drink, and breathe this stuff. I love being around that same energy like entrepreneurs have, that grind and hustle. It’s energizing. Also, another demographic that I serve primarily is our black female entrepreneurs. We are the fastest-growing demographic of entrepreneurs, plus we are the most underserved, underfunded, and most vulnerable.

For what it is that I do, my job is to protect businesses so that they can grow safely. That’s an area that needs a lot of help. I do love being able to help protect people even though I have the mindset of people are terrible but at the same time, people are awesome. There are two sides of a coin. There’s awesomeness and there’s horribleness in all of us. My job is to make sure that the bad part stays at bay and then protect the good parts that part can grow. I love doing that. All types of businesses, I love it.

We serve more than black female entrepreneurs because I’m black and I’m female, those are generally the types of clients that I attract. I love the hustle and ingenuity in the different types of brands. I buy from my clients all the time. I spend way too much money on all their products because they’re good. I’m like, “This stuff is good.” Most of the times, it’s better than these big box brands because they do it from passion and the love of this particular thing not because they have some shareholders that they need to produce a profit for. That’s what I love about it.

What are some small businesses that we can help support and some amazing indie brands that you’re working with that you know are going to do some amazing things in the years to come?

I’ll let Melody take that one. She works with way more than I do. I don’t want to divulge my clients.

I don’t want to ask. People are like, “You didn’t list me.” First of all, I love all of you. You can go to my Instagram, @BeautyBizExpert and we always post our clients. We’ll leave it at that because I don’t want anybody to be like, “You didn’t talk about my brand.” We work with some amazing brands, and they do all great things. They’re all super passionate about what they do. We do post all of our clients that you can support. Maybe we need to start a link like, “Support these brands.” That’s a good idea.

Where can our followers follow both of you ladies?

I’m on Instagram, @BeautyBizExpert. I have a free Facebook Group called Beauty Business Entrepreneurs. You can join us there.

My law firm’s name is New Millennia Legal Resources. I have a Facebook Group, and that’s where I spend probably the majority of my time. It’s called Free Legal Resources. If you guys want to follow me there, that’s the place to do it.

Raven is generous with her knowledge.

How do you define success? Do you feel like you are successful?

For me, success is happiness. All of this is a means to an end. It’s happiness, contentment, and having a good life. I work obviously to provide for my children. If I don’t have food on the table and we’re hungry, that’s not going to be a good life, so money matters. However, at a certain point, it’s fulfillment and loving what you do. I love what I do even though I have clients that drive me to drink sometimes but the fact that I get to do what I want to do all day long, that’s successful for me. I could die right now and I feel like I have achieved my ultimate life’s goal. I’m happy. I love my clients and helping people. I feel good about what I do. I’m not looking over my shoulder but I feel good about it.

For me, success is freedom. We hang out with a lot of entrepreneurs that post big wins. They’re multi-million-dollar brands. I met a guy who works with brands that are doing $13 million a month and stuff. I don’t know if that’s what drives me or if it’s the freedom to be like, “I’m going to take next week off and hang out with my kids.” I don’t know if that’s good or bad. In my head, I’m having the conversation of like, “It’s okay to have both. It’s okay to have freedom and a lot of money.” I’m not poor. I was even doing well. It’s like, “Can we have the $13 million a month and freedom at the same time?” I’m having a bigger conversation in my head than I used to have.

For me, success is freedom. I have a tremendous amount of that. I have my own two children. I’m blending the families. We have five teenagers. Being available is a big deal. Also, setting an example. As Raven said in the black community, normalizing success and hate. It’s okay to be wildly wealthy and chill at the same time. We can do this. I’m sure you guys see this too, Karen and Breanna. Once you reach a certain level, you realize you can create anything. There are no limits. We’re taught the wrong way for a long time. Freedom is my biggest value but then also the freedom of like, “How can we think bigger? Who can we take alongside us?” That’s my thought about it. I know you have young children. When your teenagers are teenagers and they’re crazy, we remember our teenagers.

I’m one of the crazy ones.

I’ve been thinking about this as well. There’s not a respecter of persons. If I can do it, you can do it. I always feel like I’m a storyteller because I love bringing on brand owners who are like them so they can say, “We live in the same city. They looked like me.” If I can do it, they can do it. Normalizing that is successful to me as well.

Thank you so much. You guys are both inspiring. I love this conversation so much. There’s so much that we can all learn from you guys. I will be in touch, Raven. To everybody reading, I hope you guys enjoyed this episode. Please go and follow these amazing, incredible young women. They’re killing it. Thank you so much for your time.

Thank you for having us.

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About Melody Bockelman

AFB 14 | Legal MistakesMy track record includes brands on QVC, HSN, large retailers and grocery store chains. I’ve also worked on product development for projects with NASA technology (that was cool).

Aside from managing others’ brands I have successfully run 2 e-commerce websites and in 2008 one of our products was featured on Oprah! (I’ll tell you that story sometime soon.)

And today I am here to serve you. This virtual consulting and membership website is designed to help you grow, launch and soar your new product!

About Raven Willis

AFB 14 | Legal MistakesWith over 20 years of experience with contracts, I specialize in protecting small businesses through drafting and negotiating complex and high-dollar business agreements so they can safely grow and thrive in their respective industries.

I have extensive expertise in writing, reviewing, and negotiating well over $2 billion worth of agreements that include federal procurements, subcontracts, and commercial agreements such as non-disclosure, non-compete, employee, consulting, independent contractor, virtual assistant, influencer, collaborative, and licensing agreements.

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