diff --git a/client/src/App.jsx b/client/src/App.jsx
index 7ce0d97..2bb70e2 100644
--- a/client/src/App.jsx
+++ b/client/src/App.jsx
@@ -13,6 +13,9 @@ import { TEMPLATES } from './constants/templates';
 
 function App() {
   const [editingElement, setEditingElement] = useState(null);
+  const [pendingImage, setPendingImage] = useState(null);
+  const [showBgRemovalPrompt, setShowBgRemovalPrompt] = useState(false);
+  const [editingElementId, setEditingElementId] = useState(null);
 
   const {
     elements,
@@ -128,18 +131,50 @@ function App() {
 
   // Handle photo editing
   const handleEditPhoto = (element) => {
-    setEditingElement(element);
+    setEditingElementId(element.id);
+    setPendingImage({ src: element.src, id: element.id });
+    setShowBgRemovalPrompt(false);
   };
 
   const handlePhotoEditComplete = (editedImageUrl) => {
-    if (editingElement) {
-      updateElement(editingElement.id, { src: editedImageUrl });
-    }
-    setEditingElement(null);
+    setPendingImage(prev => ({ ...prev, editedUrl: editedImageUrl }));
+    setShowBgRemovalPrompt(true);
   };
 
   const handlePhotoEditClose = () => {
-    setEditingElement(null);
+    setPendingImage(null);
+    setEditingElementId(null);
+    setShowBgRemovalPrompt(false);
+  };
+
+  const handleBgRemovalYes = async () => {
+    if (pendingImage?.editedUrl) {
+      try {
+        const response = await fetch('/api/remove-background', {
+          method: 'POST',
+          headers: { 'Content-Type': 'application/json' },
+          body: JSON.stringify({ image: pendingImage.editedUrl }),
+        });
+        const data = await response.json();
+        if (data.success && editingElementId) {
+          updateElement(editingElementId, { src: data.result });
+        }
+      } catch (err) {
+        console.error('Background removal failed:', err);
+      }
+    }
+    setShowBgRemovalPrompt(false);
+    setPendingImage(null);
+    setEditingElementId(null);
+  };
+
+  const handleBgRemovalNo = () => {
+    if (pendingImage?.editedUrl && editingElementId) {
+      updateElement(editingElementId, { src: pendingImage.editedUrl });
+    }
+    setShowBgRemovalPrompt(false);
+    setPendingImage(null);
+    setEditingElementId(null);
   };
 
   return (
@@ -157,6 +192,7 @@ function App() {
         onAddText={handleAddText}
         onAddTemplate={handleAddTemplate}
         onSlotImageUpload={handleSlotImageUpload}
+        elements={elements}
       />
 
       {/* Center Canvas Area */}
@@ -280,13 +316,86 @@ function App() {
       />
 
       {/* Photo Pre-Editor Modal */}
-      {editingElement && (
+      {pendingImage && (
         <PhotoPreEditor
-          imageSrc={editingElement.src}
+          imageSrc={pendingImage.src}
           onComplete={handlePhotoEditComplete}
           onClose={handlePhotoEditClose}
         />
       )}
+
+      {/* Background removal prompt after Filerobot edit */}
+      {showBgRemovalPrompt && (
+        <div style={{
+          position: 'fixed',
+          top: 0,
+          left: 0,
+          right: 0,
+          bottom: 0,
+          background: 'rgba(0, 0, 0, 0.5)',
+          display: 'flex',
+          alignItems: 'center',
+          justifyContent: 'center',
+          zIndex: 1000,
+        }}>
+          <div style={{
+            background: 'var(--bg-primary)',
+            borderRadius: 'var(--radius-md)',
+            padding: '1.5rem',
+            maxWidth: '360px',
+            boxShadow: 'var(--shadow-lg)',
+          }}>
+            <h3 style={{
+              margin: '0 0 0.75rem 0',
+              fontSize: '16px',
+              fontWeight: '600',
+              color: 'var(--text-primary)',
+            }}>
+              Remove Background?
+            </h3>
+            <p style={{
+              margin: '0 0 1.25rem 0',
+              fontSize: '13px',
+              color: 'var(--text-secondary)',
+              lineHeight: '1.4',
+            }}>
+              AI can automatically remove the background from your image.
+            </p>
+            <div style={{ display: 'flex', gap: '0.5rem', justifyContent: 'flex-end' }}>
+              <button
+                onClick={handleBgRemovalNo}
+                style={{
+                  padding: '0.5rem 1rem',
+                  border: `1px solid var(--border)`,
+                  borderRadius: 'var(--radius-sm)',
+                  background: 'var(--bg-primary)',
+                  color: 'var(--text-primary)',
+                  fontSize: '13px',
+                  fontWeight: 500,
+                  cursor: 'pointer',
+                }}
+              >
+                Skip
+              </button>
+              <button
+                onClick={handleBgRemovalYes}
+                style={{
+                  padding: '0.5rem 1rem',
+                  border: 'none',
+                  borderRadius: 'var(--radius-sm)',
+                  background: 'var(--accent)',
+                  color: '#fff',
+                  fontSize: '13px',
+                  fontWeight: 600,
+                  cursor: 'pointer',
+                }}
+              >
+                ✨ Remove Background
+              </button>
+            </div>
+          </div>
+        </div>
+      )}
     </div>
   );
 }
diff --git a/client/src/components/canvas/DesignCanvas.jsx b/client/src/components/canvas/DesignCanvas.jsx
index 0f5ddc1..cf14d77 100644
--- a/client/src/components/canvas/DesignCanvas.jsx
+++ b/client/src/components/canvas/DesignCanvas.jsx
@@ -61,6 +61,7 @@ export const DesignCanvas = memo(function DesignCanvas({
         <Layer>
           {elements.map((el) => {
             if (el.type === 'image') {
+              const slot = el.slotId ? slots.find(s => s.id === el.slotId) : null;
               return (
                 <ImageElement
                   key={el.id}
@@ -71,7 +72,7 @@ export const DesignCanvas = memo(function DesignCanvas({
                   height={el.height}
                   rotation={el.rotation}
                   src={el.src}
-                  crop={el.crop}
+                  slot={slot}
                   isSelected={el.id === selectedId}
                   onSelect={() => onSelect(el.id)}
                   onUpdate={(attrs) => onUpdate(el.id, attrs)}
diff --git a/client/src/components/canvas/ImageElement.jsx b/client/src/components/canvas/ImageElement.jsx
index 5971bb3..0acdb41 100644
--- a/client/src/components/canvas/ImageElement.jsx
+++ b/client/src/components/canvas/ImageElement.jsx
@@ -2,9 +2,9 @@ import { useEffect, useState, memo } from 'react';
 import { Image, Transformer } from 'react-konva';
 import useImage from 'use-image';
 
-function URLImage({ src, ...props }) {
+function URLImage({ src, crop, ...props }) {
   const [img] = useImage(src, 'anonymous');
-  return <Image image={img} {...props} />;
+  return <Image image={img} crop={crop} {...props} />;
 }
 
 export const ImageElement = memo(function ImageElement({
@@ -15,20 +15,44 @@ export const ImageElement = memo(function ImageElement({
   height,
   rotation,
   src,
+  slot,
   isSelected,
   onSelect,
   onUpdate,
   onCommit,
+  dragBoundFunc,
 }) {
   const shapeRef = null;
   const trRef = null;
+  const [crop, setCrop] = useState(null);
 
+  // Calculate crop for slotted images using object-fit: cover logic
   useEffect(() => {
-    if (isSelected && trRef.current) {
-      trRef.current.nodes([shapeRef.current]);
-      trRef.current.getLayer().batchDraw();
+    if (slot && src) {
+      const img = new Image();
+      img.src = src;
+      img.onload = () => {
+        const imageRatio = img.width / img.height;
+        const slotRatio = slot.bounds.width / slot.bounds.height;
+
+        let cropWidth, cropHeight, cropX = 0, cropY = 0;
+
+        if (imageRatio > slotRatio) {
+          // Image is wider than slot - crop width
+          cropHeight = img.height;
+          cropWidth = img.height * slotRatio;
+          cropX = (img.width - cropWidth) / 2;
+        } else {
+          // Image is taller than slot - crop height
+          cropWidth = img.width;
+          cropHeight = img.width / slotRatio;
+          cropY = (img.height - cropHeight) / 2;
+        }
+
+        setCrop({ x: cropX, y: cropY, width: cropWidth, height: cropHeight });
+      };
     }
-  }, [isSelected]);
+  }, [slot, src]);
 
   return (
     <>
@@ -40,6 +64,7 @@ export const ImageElement = memo(function ImageElement({
         height={height}
         rotation={rotation}
         src={src}
+        crop={crop}
         draggable
         onClick={onSelect}
         onTap={onSelect}
@@ -77,6 +102,10 @@ export const ImageElement = memo(function ImageElement({
         <Transformer
           ref={trRef}
           boundBoxFunc={(oldBox, newBox) => {
+            // Respect slot boundaries during resize
+            if (slot && dragBoundFunc) {
+              return dragBoundFunc(oldBox, newBox);
+            }
             // Limit resize to minimum size
             if (newBox.width < 20 || newBox.height < 20) {
               return oldBox;
diff --git a/client/src/components/sidebar/Sidebar.jsx b/client/src/components/sidebar/Sidebar.jsx
index 99e5215..456b3e5 100644
--- a/client/src/components/sidebar/Sidebar.jsx
+++ b/client/src/components/sidebar/Sidebar.jsx
@@ -11,7 +11,7 @@ const TABS = [
   { id: 'templates', label: 'Templates', icon: '📋' },
 ];
 
-export function Sidebar({ onAddImage, onAddSticker, onAddText, onAddTemplate, onSlotImageUpload }) {
+export function Sidebar({ onAddImage, onAddSticker, onAddText, onAddTemplate, onSlotImageUpload, elements }) {
   const [activeTab, setActiveTab] = useState('upload');
 
   const renderTabContent = () => {
@@ -23,7 +23,7 @@ export function Sidebar({ onAddImage, onAddSticker, onAddText, onAddTemplate, on
       case 'text':
         return <TextTab onAddText={onAddText} />;
       case 'templates':
-        return <TemplatesTab onAddTemplate={onAddTemplate} onSlotImageUpload={onSlotImageUpload} />;
+        return <TemplatesTab onAddTemplate={onAddTemplate} onSlotImageUpload={onSlotImageUpload} elements={elements} />;
       default:
         return null;
     }
diff --git a/client/src/components/sidebar/TemplatesTab.jsx b/client/src/components/sidebar/TemplatesTab.jsx
index 2ecf1eb..a5beffb 100644
--- a/client/src/components/sidebar/TemplatesTab.jsx
+++ b/client/src/components/sidebar/TemplatesTab.jsx
@@ -16,9 +16,13 @@ function getCategoryEmoji(category) {
   return emojis[category] || '🎨';
 }
 
-export function TemplatesTab({ onAddTemplate, onSlotImageUpload }) {
+export function TemplatesTab({ onAddTemplate, onSlotImageUpload, elements = [] }) {
   const [selectedTemplateId, setSelectedTemplateId] = useState(null);
   const [uploadSlotId, setUploadSlotId] = useState(null);
+  const [showConfirmDialog, setShowConfirmDialog] = useState(false);
+  const [pendingTemplate, setPendingTemplate] = useState(null);
+
+  const hasElements = elements && elements.length > 0;
 
   const templates = [
     {
@@ -36,9 +40,29 @@ export function TemplatesTab({ onAddTemplate, onSlotImageUpload }) {
     })),
   ];
 
-  const handleSelectTemplate = (template) => {
+  const performTemplateSwitch = (template) => {
     setSelectedTemplateId(template.id);
     onAddTemplate(template.id);
+    setPendingTemplate(null);
+    setShowConfirmDialog(false);
+  };
+
+  const handleSelectTemplate = (template) => {
+    if (hasElements) {
+      setPendingTemplate(template);
+      setShowConfirmDialog(true);
+    } else {
+      performTemplateSwitch(template);
+    }
+  };
+
+  const handleConfirmSwitch = () => {
+    performTemplateSwitch(pendingTemplate);
+  };
+
+  const handleCancelSwitch = () => {
+    setPendingTemplate(null);
+    setShowConfirmDialog(false);
   };
 
   const handleSlotClick = (slotId) => {
@@ -63,24 +87,6 @@ export function TemplatesTab({ onAddTemplate, onSlotImageUpload }) {
   // Get slots for selected template
   const selectedTemplate = TEMPLATES.find(t => t.id === selectedTemplateId);
   const slots = selectedTemplate?.slots || [];
-  const templates = [
-    {
-      id: 'freeform',
-      name: 'Freeform',
-      description: 'No template - design freely',
-      thumbnail: '🎨',
-    },
-    ...TEMPLATES.map(t => ({
-      id: t.id,
-      name: t.name,
-      description: t.description,
-      thumbnail: getCategoryEmoji(t.category),
-    })),
-  ];
-
-  const handleSelectTemplate = (template) => {
-    onAddTemplate(template.id);
-  };
 
   // Hidden file input for slot image uploads
   const renderFileInput = () => (
@@ -252,6 +258,80 @@ export function TemplatesTab({ onAddTemplate, onSlotImageUpload }) {
       </div>
 
       {renderSlotUploads()}
+
+      {/* Confirmation dialog for template switch */}
+      {showConfirmDialog && (
+        <div style={{
+          position: 'absolute',
+          top: 0,
+          left: 0,
+          right: 0,
+          bottom: 0,
+          background: 'rgba(0, 0, 0, 0.5)',
+          display: 'flex',
+          alignItems: 'center',
+          justifyContent: 'center',
+          zIndex: 100,
+          borderRadius: 'var(--radius-md)',
+        }}>
+          <div style={{
+            background: 'var(--bg-primary)',
+            borderRadius: 'var(--radius-md)',
+            padding: '1.25rem',
+            maxWidth: '320px',
+            boxShadow: 'var(--shadow-lg)',
+          }}>
+            <h4 style={{
+              margin: '0 0 0.75rem 0',
+              fontSize: '14px',
+              fontWeight: '600',
+              color: 'var(--text-primary)',
+            }}>
+              Switch Template?
+            </h4>
+            <p style={{
+              margin: '0 0 1.25rem 0',
+              fontSize: '12px',
+              color: 'var(--text-secondary)',
+              lineHeight: '1.4',
+            }}>
+              Your current design has elements on the canvas. Switching templates may discard your work.
+            </p>
+            <div style={{ display: 'flex', gap: '0.5rem', justifyContent: 'flex-end' }}>
+              <button
+                onClick={handleCancelSwitch}
+                style={{
+                  padding: '0.5rem 0.75rem',
+                  border: `1px solid var(--border)`,
+                  borderRadius: 'var(--radius-sm)',
+                  background: 'var(--bg-primary)',
+                  color: 'var(--text-primary)',
+                  fontSize: '12px',
+                  fontWeight: 500,
+                  cursor: 'pointer',
+                }}
+              >
+                Cancel
+              </button>
+              <button
+                onClick={handleConfirmSwitch}
+                style={{
+                  padding: '0.5rem 0.75rem',
+                  border: 'none',
+                  borderRadius: 'var(--radius-sm)',
+                  background: 'var(--accent)',
+                  color: '#fff',
+                  fontSize: '12px',
+                  fontWeight: 600,
+                  cursor: 'pointer',
+                }}
+              >
+                Switch Anyway
+              </button>
+            </div>
+          </div>
+        </div>
+      )}
     </div>
   );
 }
diff --git a/client/src/constants/templates.js b/client/src/constants/templates.js
index 9b08438..074392c 100644
--- a/client/src/constants/templates.js
+++ b/client/src/constants/templates.js
@@ -19,6 +19,18 @@ export const TEMPLATES = [
         aspectRatio: 1,
       },
     ],
+    layers: {
+      background: {
+        type: 'rect',
+        x: 0,
+        y: 0,
+        width: 300,
+        height: 300,
+        fill: '#1e40af',
+        opacity: 0.08,
+      },
+      overlay: null,
+    },
     elements: [
       {
         type: 'text',
@@ -47,6 +59,18 @@ export const TEMPLATES = [
     name: 'Band Merch',
     category: 'Music',
     description: 'Classic band t-shirt design',
+    layers: {
+      background: {
+        type: 'rect',
+        x: 0,
+        y: 0,
+        width: 300,
+        height: 300,
+        fill: '#000000',
+        opacity: 0.12,
+      },
+      overlay: null,
+    },
     elements: [
       {
         type: 'text',
@@ -85,6 +109,18 @@ export const TEMPLATES = [
     name: 'Minimal Quote',
     category: 'Quotes',
     description: 'Simple centered quote design',
+    layers: {
+      background: {
+        type: 'rect',
+        x: 0,
+        y: 0,
+        width: 300,
+        height: 300,
+        fill: '#f1f5f9',
+        opacity: 0.05,
+      },
+      overlay: null,
+    },
     elements: [
       {
         type: 'text',
@@ -113,6 +149,18 @@ export const TEMPLATES = [
     name: 'Funny Cat',
     category: 'Animals',
     description: 'Cute cat with funny text',
+    layers: {
+      background: {
+        type: 'rect',
+        x: 0,
+        y: 0,
+        width: 300,
+        height: 300,
+        fill: '#fef3c7',
+        opacity: 0.08,
+      },
+      overlay: null,
+    },
     elements: [
       {
         type: 'text',
@@ -141,6 +189,18 @@ export const TEMPLATES = [
     name: 'Gradient Vibes',
     category: 'Abstract',
     description: 'Modern gradient text design',
+    layers: {
+      background: {
+        type: 'rect',
+        x: 0,
+        y: 0,
+        width: 300,
+        height: 300,
+        fill: '#f3e8ff',
+        opacity: 0.1,
+      },
+      overlay: null,
+    },
     elements: [
       {
         type: 'text',
@@ -189,6 +249,18 @@ export const TEMPLATES = [
     name: 'Vintage Badge',
     category: 'Vintage',
     description: 'Retro badge style design',
+    layers: {
+      background: {
+        type: 'rect',
+        x: 0,
+        y: 0,
+        width: 300,
+        height: 300,
+        fill: '#78716c',
+        opacity: 0.08,
+      },
+      overlay: null,
+    },
     elements: [
       {
         type: 'text',
@@ -237,6 +309,18 @@ export const TEMPLATES = [
     name: 'Nature Lover',
     category: 'Nature',
     description: 'Mountain and nature themed',
+    layers: {
+      background: {
+        type: 'rect',
+        x: 0,
+        y: 0,
+        width: 300,
+        height: 300,
+        fill: '#059669',
+        opacity: 0.08,
+      },
+      overlay: null,
+    },
     elements: [
       {
         type: 'text',
@@ -275,6 +359,18 @@ export const TEMPLATES = [
     name: 'Tech Geek',
     category: 'Tech',
     description: 'Programming themed design',
+    layers: {
+      background: {
+        type: 'rect',
+        x: 0,
+        y: 0,
+        width: 300,
+        height: 300,
+        fill: '#3b82f6',
+        opacity: 0.08,
+      },
+      overlay: null,
+    },
     elements: [
       {
         type: 'text',
@@ -309,6 +405,7 @@ export const TEMPLATES = [
     ],
   },
 ];
+];
 
 export const TEMPLATE_CATEGORIES = [
   'All',