We get several calls from start-up companies and entrepreneurs about utilizing licensing to launch their product. The conversation usually goes…. Royalty accounting can be somewhat complex, especially depending on the contract terms that are negotiated.
However, once you have an…. Today, most businesses prefer not to guarantee results in a contract — let alone guarantee sales results.
This is what…. Inevitably one of the first questions asked is how much will we earn in royalty revenue. As an industry expert…. Some consider licensing out their brand very risky, while others would argue that licensing out their brand is a low-risk…. One of our clients is looking for new partners in the outdoor space. With Outdoor Retailer happening down in Denver, I jumped…. We stopped exhibiting at the licensing show when it moved from NY to Las Vegas.
That seems like ages ago,…. Like many industries, once a year the licensing community descends on Las Vegas, Mandalay Bay.
The show offers something for…. Disruption: The Only Constant Did you ever think you would buy toilet paper on your phone? Neither did supermarkets. We enjoyed working with our licensing partners and meeting with…. You know you can relate! As a licensing program manager, I always get excited for a new product launch at retail. Licensees, licensors, agents, manufacturers,….
Is cheesecake the new tobacco? For all the lessons technology teaches us, did you ever feel like it also ignores some of the most important…. Brands are constantly seeking the loyal consumer. Not the one who buys occasionally, but the one who follows through on….
Batman and Robin. Brin and Page. Some business partnerships are so great that they appear to happen…. When you make your shopping list, do you think about buying a category or a brand?
Even if you think…. My friend called me from Target last week. But private label…. The end of storytelling? Every business that has ever developed a product dreams of getting on shelf at a Walmart or Home Depot. Thanks to technology, we assumed for many years that…. I have something I have to get off my chest. There I said it.
Licensing restaurant brands into supermarket products is nothing new. Less is more. Licensing a company to expand your trademark into other product categories can be rewarding to your bottom line and strengthen…. Today you can buy not just scented candles but…. For 15 years IMC has been helping the owners of global iconic brands find ways to grow through new products…. While the show has never….
If you want to develop great products that actually sell at retail, you are probably already thinking about how to…. Kraft Foods recent announcement of its intent to test market McCafe packaged coffee adds a deep, new wrinkle to the already interesting…. Licensors with iconic brands often have to make tough choices about extending their brands in new markets through licensing versus…. On vacation this summer I needed to get my sunglasses repaired.
While waiting, I was surprised to look in the…. The coco-brown box features the names…. You minimize your costs and risks:. The license agreement is normally for a considerable period of time and there may be an annual minimum royalty required. New technology may become available making the licensed opportunity obsolete. The agreement may force the licensee to accept restrictions on its marketing. The licensee may lose the capacity to develop its own technology internally.
Subject Matter of the Agreement—may be 1 patent, 2 copyright, 3 trademark, 4 industrial design, 5 trade secret know-how, technology, experience, etc. Granting of Rights—defines what licensor is transferring to licensee Licensor's Obligation—sets out how transfer is to take place in terms of assistance, support, training and co-operation Licensee's Obligation—sets out financial requirements, guarantees of licensee, secrecy, costs, etc. License Fee—fee paid to licensor on signing agreement Royalty—ongoing share of proceeds paid to licensor for the rights.
May be a lump sum, or percentage of proceeds or amount per unit sold, etc. Term—how long the agreement is to last Designated Area and Exclusivity—define manufacturing and marketing area of license Termination—describes rights of both licensor and licensee to terminate agreement Guarantees—licensor will normally not guarantee the results of using the rights granted.
The licensee may be required to provide warranties, public liabilities, etc. Licensor should provide licensee sufficient information to determine feasibility of the opportunity in the proposed area.
Licensor should provide: product brochure, bill of materials and specifications, labour and time, how long marketed and growth, other licensees where located and right to contact , benefits over competition, estimated total market, warranties, marketing, training provided, financial terms, etc.
Prospective licensee does a feasibility study based on his area and the market he will have. Licensor may require the potential licensee to sign a Confidential Disclosure Agreement before providing a full package of information. If negotiation is lengthy the licensor may request a letter of intent and some partial payment for keeping the opportunity available for a period of time until licensee determines feasibility. The licensing structure should be the result of careful analysis of company needs, resources, and goals.
Companies can also use a combinatio n of approaches to organize licensing activities. Regardless of which arrangement is selected, a crack legal team and communication between all of the parties that touch the brand are essential. What to Look for in a Licensing Partner As with all business relationships, a partnership mentality is imperative to the success of any licensing arrangement.
While some deals may be short-term transactions, most licensing collaborations are long-term, symbiotic partnerships. For a product to succeed, all parties must benefit: both licensor and licensee and licensing agent, if applicable must gain financially, and the end consumer must benefit through increased product value.
All stakeholders should strive to understand the long-term implications of licensing—to both the brand and the bottom line. Do they understand my brand? Who are their other licensees?
You should also look for any hurdles that the brand owner requires of licensees; for example, consumer acceptance tests, taste tests, etc. Structuring the Deal The licensor and licensee should consider a number of factors when entering an agreement. Type of Agreement: Single-branding, co-branding, etc. Licensed Products: Proposed name, description, and packaging [i. Include potential line extensions. Royalty Rate: Royalty rate by year s , channel s , etc. Royalties based on percent of net sales.
Minimum Annual Royalty Guarantee: Figure based on volume estimates and reasonable product sell-in. Royalty rates and minimum annual royalty guarantees MARGs typically have an inverse relationship, but are both highly related to the overall opportunity. For example, a product with 20MM in annual sales will likely garner a lower royalty rate than a product with 5MM in annual sales. Waiver Governing Law Termination License Fee Assignment Notices Counterparts Severability Entire Agreement
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