What Is Licensing?

Licensing enables companies to use recognisable copyrighted trademarks and imagery on their products to help increase their consumer appeal. It provides a unique selling point and distinct point of difference. The imagery could be from films, TV shows, sports events, old archived imagery of advertising posters and campaigns or company logos.

For companies to be able to use the imagery or Intellectual Property (IP) they must have a license to do so. There needs to be a contract in place between the Licensor (IP owner) and the Licensee (manufacturer/user).

In most circumstances the Licensor outsources the licensing programme to a Licensing Agent, allowing them time to concentrate on developing sales of their core products.

It is the Licensing Agent’s job to identify appropriate Licensees and to negotiate the terms of the contract.  This would include the Royalty Rate and a non-refundable advance normally based on projected income and confirms the licensee’s commitment.

Licenses are normally granted on a non-exclusive basis and contracts can be granted for different territories and a typical term is normally 3 years.

The Licensing Agent’s duties are much more than just negotiating the terms of the contract. Below is a summary of the common day-to-day functions.

  • To understand the licensor’s IP and its values and target group
  • To identify Licensees
  • To agree and finalise a license agreement comprising the Term, Territory, product category, royalty and advance.
  • To develop the Brand’s potential in the relevant international markets by advising retailers and licensers of a Brand’s value.
  • To coordinate the licensing programme on a market by market basis including identification of key customers both in retail and online outlets.
  • To manage the approval process of the use of the Licensor’s IP at all stages
  • To collect and distribute global royalty payments, normally quarterly.
  • To audit licensee’s sales of the licensed product.
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