On Thursday, CrossFit Inc. announced it was bringing a lawsuit against Reebok after they repeatedly failed to pay proper royalties to CrossFit and for hiding underpayments.
Currently Reebok is eight years into their 10 year exclusive license to sell apparel and shoes with the CrossFit trademark, in addition to sponsoring the Reebok CrossFit Games. That agreement is up at the end of 2019.
So what did Reebok do wrong?
As a part of this deal, which was inked in 2010, Reebok agreed to pay royalties on those CrossFit products they sold.
The thing is, they didn’t, according to CrossFit’s lawsuit. They allege that back in 2013, “Reebok began altering the way it calculated royalty payments.” Basically the formula they use to calculate how much they owe CrossFit, Inc. In addition, they didn’t disclose the new formula.
How much we talking here?
According to the lawsuit, at least $4.8 million. Reebok was also supposed to spend $51.75 million in marketing yet they’ve failed to produce evidence they’ve done so.
And apparently it’s not the first time Reebok has been hit with a royalties lawsuit.
The 2018 and 2019 CrossFit Games will still be under this exclusive partnership, but after that it’s open season for any brand to come in.
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