TYGlobe

MCN agencies (Multi-Channel Networks) claim to help you "incubate projects,"  "grow followers," and "monetize content." However, if cooperation encounters issues, the consequences range from revenue deductions to exorbitant penalty fees. This article outlines the key legal pitfalls throughout the entire process of signing contracts, fulfilling obligations, and terminating agreements, along with practical mitigation strategies.

III. Who is responsible for "failing to meet performance targets"? The responsibility cannot be solely imposed on you!

Case Review

Company A commissioned Company B (an MCN) to conduct live-streaming sales, but faced penalties from the platform for failing to meet sales targets and violating regulations. Consequently, Company A sued Company B. The contract merely vaguely stated "provision of comprehensive services."

The court ruled that Company B lost the case and was ordered to pay liquidated damages.

Reason: As a professional organization, an MCN should assume greater responsibilities (such as rule training, script review, and anomaly handling) and cannot shift all risks to its partners.

Cooperation Guide

✅ The contract must clearly define the obligations of the MCN, for example:

l Conduct live broadcast script reviews several times per month;

l Has a dedicated person been assigned to handle changes in platform rules?

l When encountering anomalies such as traffic restrictions or content removals, the MCN must assist in filing appeals within 24 hours.

l Confidentiality obligations regarding business partner cooperation information.

✅ Performance evaluations should be reasonable:

Avoid using absolute metrics such as "guaranteed sales volume" (which are highly influenced by market conditions and platform algorithms).

It is permissible to stipulate that "the completion of basic tasks shall be deemed as meeting the requirements," rather than focusing solely on outcomes.

[Negotiation Skills]

The MCN must submit a "service list" as an appendix to the contract to prevent "free support" from becoming empty promises.

IV. Difficult to terminate the contract? In case of a contractual deadlock, the court may support your claim!

Case Review

After signing the contract, MCN forced Xiao C to switch to an unsui live-streaming platform. When Xiao C refused and requested termination of the agreement, they demanded a substantial penalty fee.

The court ruled: the contract is terminated; Xiao C shall only compensate MCN for actual losses (far lower than the contractual penalty).

Reason: Both parties have reached a contractual deadlock, and continuing performance would be clearly unfair to Party C.

Cooperation Guide

✅ Prevent "stalemates" from the outset when signing:

l Clearly specify the circumstances under which termination may occur without liability (e.g., if the MCN fails to provide operational support for two consecutive months).

l Limit the MCN's unilateral right to designate or change platforms;

l The penalty amount should be linked to your actual earnings (e.g., "not exceeding three times your average income over the past six months").

✅ If you have reached a deadlock:

l Do not terminate broadcasting without authorization; first issue the "Letter of Negotiated Termination."

l retain evidence of MCN default (e.g., unpaid amounts or failed service delivery);

l Taking the initiative to file a lawsuit demanding both contract termination and reduction of liquidated damages is more advantageous than passively responding to litigation.