I have dilemma...I have received several requests to do character cakes like Jake and the Neverland Pirates, Backyardigans, etc. however, I have turned these requests down because I do not have an agreement with the studios/companies that own these to produce these cakes with exact images. But, I know that other bakers where I live (that are home-based under the new Colorado Cottage Foods Act), are doing these cakes. So, my question is this: If you do not work for a bakery that has a licensing agreement, i.e., a grocery store, do you make character cakes? Do you not need a license agreement to make these, or, do you just try to "fly under the radar" and make these without an agreement? Thanks in advance for the feedback/advice!
AYou don't necessarily need a formal licensing agreement, but you do need permission from the copyright owner to reproduce the character -- some copyright owners allow this for free, some will ask for a license fee, and some won't allow it at all.
Some bakeries regularly infringe copyrights and do not ask for permission, this opens them up to a potential lawsuit from the copyright owner, or more likely a C&D letter and/or a legal settlement.
In my experience it's better to ask the customer to secure the permission, that way they blame the copyright owner instead of you if they get turned down.