According to CrossFit, a fitness regimen company with thousands of workout facilities spanning the country, its sponsorship and licensing agreement inked with Reebok in 2010 went quite well for a few years.
Amicability allegedly ended around 2016, when CrossFit principals say they discovered creative financial machinations employed by Reebok to skirt its royalty duties. A federal lawsuit filed by CrossFit in a California court earlier this year also claimed that Reebok purposefully avoided spending about $52 million it was contractually obligated to expend on marketing licensed CrossFit products.
Moreover, the filing contended, Reebok further undermined the companies’ partnership by unlawfully directing consumer traffic from CrossFit’s website to Reebok’s, resulting in even lower royalties that had been contractually negotiated.
The bottom line, stressed CrossFit’s federal filing, was that its licensing partner “secretly reneged on the terms of the agreement.”
Reebok’s first response to CrossFit’s allegations was a flat denial. In fact, the company stated that the complaint had “no merit” and unreasonably escalated a disagreement lacking any foundation. Company officials confidently predicted a favorable outcome for the shoe and apparel enterprise.
The two sides obviously engaged in sustained and focused negotiations following CrossFit’s lawsuit filed this past June, given a settlement recently announced. Although the material terms of that pact are confidential, the agreement does reportedly respond to CrossFit’s payment demands for the royalties it claims it was unlawfully denied. The company’s complaint stressed that Reebok owed it at least $4.8 million.
The post-pact rhetoric issuing from both Reebok and CrossFit is positive and even notably upbeat. Executives of both companies underscore the partnership’s bright future now that the dispute has been resolved.