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Netflix's new NFLX, +0.49% Netflix documentary about Bob Ross, the beloved and iconic TV host, painter, and public broadcasting TV host. Bob Ross: Happy Accidents Betrayal Greed describes how Steve, the artist's son, was allegedly robbed by his father's business partners. This documentary is worth your time, but it offers valuable lessons that can help business owners avoid inheritance mistakes and preserve their legacy.
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Melissa McCarthy, actress and writer, and Ben Falcone, actor and filmmaker, produced the documentary. It shows how Annette and Walt Kowalski, Ross' business partners, made money from Ross's talents and reputation, taking control of his image, name and likeness.
Bob Ross, Inc.
The Kowalskis make a large profit today from the sales of Bob Ross paint brushes and paint tubes. Bob Ross paintings can sometimes be sold online for as high as $8,000 to $10,000. Joan Kowalski, the daughter of Bob Ross Inc. (or BRI), is now running the business. She released a statement calling the documentary inaccurate and biased.
Bob Ross's son, Bob Ross, a talented artist following his father's footsteps, was prevented by the contracts he signed with The Joy of Painting host, the Kowalskis, from acquiring the rights to his fathers name, work, and money.
The saga could have been avoided says John J. Rego, a business and estate lawyer from Rego & Rego Law Offices, Bristol, R.I. He shares four key lessons that Ross' story can teach other entrepreneurs. Rego's son John J. Rego Jr. is an accomplished painter.
The film portrays Ross as an artist who was completely absorbed in his art and created over 30,000 paintings. He didn't worry about the business side of the enterprise. Ross' passion was sharing his love of painting with others (31 seasons of The Joy of Painting, 1983-1994) and convincing them that they could also paint landscapes.
The documentary shows that this allowed the Kowalskis favorable terms in contracts and other agreements with Ross. They were the ones who created them.
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Bob Ross Inc. (or BRI) was established in 1985 with equal partnership shares between Ross and Jane Kowalski, his second wife, and the Kowalskis. Annette met Ross while taking one of his painting classes. Walt was retired from a career as a CIA agent.
Bob Ross created the safeguard
According to the corporation agreement, if any of the four partners dies, the stock of the company would be divided equally among the survivors and not to an heir. According to court documents, Ross then signed over his name and image (or NIL), to BRI to be used in specific business ventures. This would also work against Ross's son, Steve.
The documentary shows that Ross did create one safeguard, however: The Bob Ross Trust. This trust was established by Ross in 1994. The terms of the trust stipulated that the rights in all NIL rights to the painters would pass to Ross' half-brother Jim Cox and his son Steve upon Ross's death. Ross made a legal error. He gave 51% to Cox, and only 49% of the interest his son. This makes Cox the executor and person responsible for carrying out Ross' wishes.
Ross's death from lung cancer in 1997 was two years after Cox had been forced to give up by the Kowalskis. In doing so, Ross received his entire NIL. In 2017, Steve Ross sued the Kowalskis, claiming that the trust granted him rights to his father's NIL as well as intellectual property. He lost the case.
A federal judge ruled in 2019 that Bob Ross didn't explicitly transfer his NIL the Kowalskis. However, the smaller contracts he had signed with the couple prior to establishing the trust gave them the right. This reasoning explains why the trust did not have the right to Ross' NIL.
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Steve Ross didn't have enough money to appeal and has not received a penny from the father's profits.
Four lessons for business owners
These are the key lessons that Bob Ross's story has to offer small-business owners, and especially family business owners:
1. Always consult your own legal counsel. Rego suggests that you have your lawyer draft partnership and corporation agreements. This will ensure that your interests are protected and promoted. If you don't have the option of this, consult your lawyer before signing any legal agreements or corporations.
Make sure that your lawyer is knowledgeable in business and corporate law. Rego says: Do not ask your relative, who is a divorce attorney, for advice.
2. Consider how shares are divided and how they will be divided if a shareholder dies. Rego states that the Ross story demonstrates how critical it is to evaluate what each partner brings to a corporation before distributing shares in accordance with their offer.
Some argue that Ross's business was dependent on his reputation, image, and art, so he should have control. It appears that the four shares were divided equally among the four partners. The death of one would result in the shares being equally divided among all the remaining shareholders. This resulted in the Kowalskis winning a substantial majority over Bob Ross, making him a minority shareholder.
Rego states that Bob would have sought legal advice if he had. His lawyer likely would have advised that in the case of a spouse's death, those shares would be given to their spouse or to an heir they choose. This would have given Bob Janes shares upon her passing or possibly made Janes share go to Bob's son.
3. Every year, review your last will. Ross could have named his son executor of his estate, if Steve is deemed mature enough. If Steve was not deemed mature enough for his father's estate, a bank representative or lawyer could have been appointed executor of the trust/will and could have looked after Ross son's interests.
4. Never give up the rights to your likeness, name, and image. You should have control over the use of your name, likeness, and image in all contracts you sign for the business. When licensing products, your name, likeness or image should be approved. This control is essential because the person in charge can change and use your name and likeness without your consent.
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A Change.org petition was signed by more than 43,000 people to have Bob Ross' name and likeness returned to his son Steve. BRI's current value is $21 million, according to the petition.
Kimberly A. Eddleston, the Schulze distinguished professor of entrepreneurial and Montone research associate at the Damore-McKim School of Business is Northeastern University. Eddleston is an academic scholar at Cornell University's Smith Family Business Initiative. Her research is focused on the careers and family businesses of entrepreneurs. She is the founder of FamilyBusiness.org and a senior Editor of Entrepreneur and Innovation Exchange (EIX.org).
Fourth-year Northeastern University journalism major Jonas Ruzek. His work, which focuses on politics and business has been published in The Huntington News and the NECC Observer as well as FamilyBusiness.org.
This article was reprinted with permission from NextAvenue.org, Inc. 2021 Twin Cities Public Television, Inc.
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