If anyone can help me with this they will be my hero! You can buy on a lot of cross stitch sites items like teddies or baby bibs which can can be stitched on, sometimes it is left blank for your own design, other times design and threads are supplied. My question is this - if I were to buy such a kit and sell the finished product, would that be legal?
If you have paid for the blank item and stitch your own design onto it, I wouldn't imagine that's any different from painting something onto a canvas, a T-shirt or even a wooden spoon and selling it.
With a pre-printed design, though, you might run into copyright difficulties. Your best bet would be to contact the manufacturer of the kit.
The only problem might come if the company had either stolen a design from a company such as Disney or obtained a license from such a firm on the basis that the completed items would not be sold commercially. (In the unlikely event of such a licence being granted, there would have be some form of notification of those conditions when you purchased the kit).
So, take care if the designs show characters like Mickey Mouse but, as long as the designs are just cute teddies and bunnies, you can sell the finished products without worrying about anything.