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WHAT IS LICENSING?

Licensing is the process of leasing a trademarked or copyrighted property for use in connection with a product, service or promotion. The property could be a name, likeness, logo, graphic, saying, signature, character or a combination of several of different elements. The licensing agreements that property owners and licenesees make have the potential to unlock powerful brands with in-demand products that drive real value to both parties. Companies large and small make billions of dollars each year in retail sales of licensed merchandise. From "Toy Story" action figures to t-shirts with the Coca-Cola logo, the potential to leverage a brand for licensing or license out a beloved brand are vast. 

Why Licensing is Important?

A walk down any shopping aisle illustrates the impact that licensing has on both the consumer and an increasingly diverse range of retailers, brands and manufacturers. Licensing can extend a brand into new categories, areas of a store or into new stores entirely. It is a way for brand owners to increase their current fan base and move into new businesses without major investment in new manufacturing processes and also allows retailers and manufacturers to stand out from the competition and offer consumers the hottest brands as well as drive sales. 

Is Licensing Right for You?

One of the most widely held misconceptions is that barriers to entry are high because it is difficult to contact brand owners. Many think you have to be a business of a certain size and only the biggest companies will get all the best licenses. But licensing isn’t out of reach for smaller players, as long as you prepare and lay the proper groundwork. Manufacturers and retailers seeking to become licensees need to decide if entering into a license agreement is indeed right for them. They should ask themselves:

  • What are the other successful properties in a particular product category?
  • Why have these worked and will the principles work for the property being sought?
  • How open is the product category?
  • Is there room on the shelf for another, similar property?
  • And how can this property stand out from what is currently available?
  • What is the scope and benefit of adding a particular product to the wider licensing program for a property?
  • What’s expected to be hot and in fashion in, say, 12-18 months-time when the product might launch?
  • What are the best retail channels and positioning for the sale of the proposed licensed product(s)?
  • Who is the core consumer at these shops? Who are the owners and representatives of the property?
  • Who are they and how should you make contact? What are the obligations of a license agreement?
  • What are the typical costs and clauses to negotiate?
  • Is there an obligation or expectation to provide marketing support for the product and to the brand owner?
  • What is the approval process and does it factor in sufficient time for product development? 

Ready to the Next Step in the Licensing Industry?

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