Here’s an interesting article from the LA Times about Deborah Gregory, an author who created “The Cheetah Girls” and sold the property to Disney. Her characters have appeared in two TV movies, sold millions of CDs and DVDs, and have toured in over 80 cities. Her contract with Disney gave her 4% of the gross revenues.
She hasn’t seen a penny.
It’s called Hollywood accounting, and it’s unfortunately very common. Apparently when writers and creators sell the rights to their characters. Hollywood studios have all sorts of tricky ways to balance the books and make sure that somehow the creator’s share of the profits never makes its way onto the bottom line.
I’m not sure if this has much to do with illustration or character design. My guess is most of you will never sell a character or story to a big Hollywood studio. But it is a reminder that at the very least you should be using good, solid contracts when working with clients to help ensure your artwork isn’t misused or your rights infringed upon. To learn more I highly recommend two books: The Graphic Artists Guild Handbook of Pricing & Ethical Guidelines 
You can find even more resources at my Amazon.com Recommended Resources page.