When a Creator Owns a Competing Product: Conflict-of-Interest Clauses

A standard exclusivity clause is written forward-looking: it stops the creator from entering new collaborations with competitors while the current deal runs. It doesn't solve a completely different situation — that the creator, before the contract was even signed, already owns, co-founded or holds equity in a product that competes directly with the brand. That's neither a future promise broken nor a new launch — it's a pre-existing fact that was never disclosed or addressed before the parties signed.

This is practical guidance from Make Influence, not legal advice. Actual contract wording should be reviewed by a lawyer.

Two related situations this often gets confused with

This article is specifically about an ownership stake that already exists when the contract is signed. That's not the same as two other, already-covered scenarios:

• Exclusivity during an active collaboration — whether the creator may say yes to another brand's sponsorship while the current deal runs. See exclusivity clauses in influencer contracts.
• The creator launches a new, own product mid-partnership — where the question is whether the existing clause covers a launch that happens after signing. See when an influencer launches their own product line.

This article's situation is the mirror image of the second one: here the ownership stake existed before the contract, not after. That changes the whole legal and practical handling — it's a disclosure and vetting question at the point of signing, not a clause breached later.

Why a standard exclusivity clause doesn't reach backward in time

An exclusivity clause is worded as a forward-looking obligation — typically something like "the creator shall not enter new sponsorships or promote competing products during the period". That kind of wording governs actions the creator takes after signing. The ownership stake the creator already held when the parties signed isn't an action taking place within the clause's period — it's a pre-existing state of affairs. Unless the clause is explicitly worded to also cover an already-existing stake (for example: "the creator represents and warrants at signing that they hold no ownership interest in a competing product"), a standard exclusivity clause simply doesn't catch the situation.

It's the same underlying logic that means an exclusivity clause also doesn't automatically cover a creator's later own-product launch unless the clause explicitly names it — see the grey area described there. The difference is that a future launch is at least an action the clause's wording could plausibly be read to reach — an existing ownership stake at signing is something a forward-looking clause can almost never be read to cover, regardless of wording, because the ownership was already a reality before the obligation itself existed.

The fix: a disclosure-and-representations clause, not just exclusivity

What actually solves the problem isn't a broader exclusivity clause — it's a separate contract term: a representations-and-warranties provision, where the creator explicitly states at signing whether they hold a material ownership interest in a directly competing business. It can take two forms:

Both models depend on the question actually being asked — neither arises automatically from a standard exclusivity clause. See the general 12 terms in what to put in an influencer contract for where a representations-and-warranties term typically sits within the contract as a whole.

Where the conflict actually needs to be caught: vetting before signing

A warranty clause gives a contractual basis if the creator made a false statement — but it doesn't, on its own, stop the brand ending up in a partnership with a genuine conflict of interest. What actually prevents that is asking the question directly, as part of selection — not assuming that no disclosure means no conflict. This belongs alongside the rest of a creator's pre-signing vetting, which the brand safety checklist already covers for other risk types — here the question is simply specific: "Do you own, co-own or hold equity in a product that directly competes with [category]?"

What if it's discovered after signing?

If the stake only surfaces after the contract is signed, the brand's position depends entirely on whether a representations-and-warranties clause exists:

• With a warranty that turns out false — the brand typically has a contractual basis to terminate or claim full or partial repayment, depending on what the contract sets as the consequence of a false statement.
• Without a warranty clause — the brand is, in practice, in the same weak position as when a creator launches a new product with no clause covering it: legally unproblematic for the creator, but a real breach of trust that typically means the partnership isn't renewed, even though it can't be terminated early.

Worked example: what an unresolved conflict of interest can cost (hypothetical)

The figures below are a made-up worked example to illustrate the point — not a real customer case.

A brand signs a six-month ambassador deal with a creator at DKK 15,000/month, DKK 90,000 total, with no representations-and-warranties clause in the contract. After three months, the brand discovers the creator has held an 8% ownership stake in a competing skincare brand she co-founded two years earlier — something she was never asked about and therefore never disclosed. Without a warranty clause, the brand has no contractual basis to terminate or claim back the DKK 45,000 already paid — only the option not to renew after the remaining three months, meaning a further DKK 45,000 in fees the brand chooses to pay out while winding the relationship down. Had the contract included a negative representation with warranty, the brand could instead have had a contractual basis for immediate termination and a negotiation over repayment of part of the DKK 45,000 already paid — the difference shows why the warranty clause itself, not a broader exclusivity clause, is what actually protects the brand in this situation.

Decision framework

For the brand:

IF you're considering a creator for a category with a low barrier to launching a competing product (e.g. beauty, supplements, fashion) → ask directly about existing ownership stakes as a standard part of vetting, before negotiating the contract.

IF the creator discloses an existing, smaller ownership stake → assess whether a category carve-out or a reduced role resolves the conflict, rather than automatically declining the partnership.

IF you're drafting the contract without having asked the question → add a negative representation with warranty as a minimum, even in an otherwise standard contract.

IF an existing ownership stake surfaces after signing and there's no warranty clause → the brand's real protection is limited to not renewing the partnership, not terminating the running one.

Common mistakes

• Assuming the exclusivity clause also covers an existing ownership stake. It's written forward-looking and generally doesn't reach back to something that already existed at signing.
• Never asking directly. Most conflicts of this type go undiscovered because no one asked the question during selection.
• Confusing this situation with a later product launch. The two need different contract terms and carry different legal consequences.
• Writing a warranty clause with no clear consequence for a false statement. Without a stated consequence, a discovered false statement still ends up as an argument about what actually follows from it.
• Assuming a small stake doesn't count. That's a negotiation between the parties, not an automatic threshold — but it can only be negotiated if it's disclosed first.

Make Influence's perspective

In our experience, this conflict shows up most often in categories where it's relatively cheap and easy for a creator to start a competing brand themselves — beauty, supplements and fashion especially. Our recommendation is that the question of existing ownership stakes gets asked directly and in writing as a standard part of any briefing or selection process, rather than assumed to be covered by the ordinary exclusivity clause. It's far cheaper to catch a conflict before signing than to negotiate out of one afterward. This is our operational experience assembling influencer and creator partnerships, not a legal conclusion.

FAQ

Does an exclusivity clause automatically cover an ownership stake the creator already had before signing?

Generally no. The clause is written forward-looking and typically only governs actions the creator takes after signing — not a pre-existing ownership stake, unless the clause is explicitly worded to cover it.

Is this the same question as a creator launching a new product mid-partnership?

No, it's the mirror image. See when an influencer launches their own product line for the situation where the ownership stake arises after the contract is already running.

What should a brand actually ask during selection?

Whether the creator owns, co-owns or holds equity in a product that directly competes with the brand's category — asked directly and in writing, as a standard part of the vetting the brand safety checklist already covers.

What if the creator owns a small, immaterial stake?

That's a negotiation between the parties — a small passive stake in a large company isn't necessarily the same problem as co-ownership of a direct competitor. But the conflict can only be assessed and negotiated once it's actually disclosed.

Can the brand terminate the contract if a false statement is discovered later?

Only if the contract includes a representations-and-warranties provision that makes the false statement an explicit breach ground. Without one, the brand's contractual basis is weaker, even though the situation feels like an obvious conflict.

Does the same logic apply to a post-contract non-compete clause?

No. A post-contract non-compete clause governs what the creator may do after the partnership ends. This article is about a state of affairs that already existed before the partnership even began.

Can an overly broad disclosure duty be struck down as unreasonable?

In principle yes, if worded unreasonably broadly — the general unreasonableness backstop in aftaleloven § 36 is the same one that applies to other contract terms between business parties, see exclusivity clauses in influencer contracts. A narrowly worded duty to disclose directly competing ownership rarely risks that in practice.