What is Licensing?
License[noun] Origin: 1325 -1375 from the Medieval Latin licentia [authorization]
The licensor retains ownership of the copyright while the licensee (the customer) purchases the right to use the trademark in products and campaigns for an agreed period, in a specified territory and within agreed places.
How Can Licensing Benefit my Business?
Using a well-known character, brand, personality or event will generate immediate market recognition for your products.
This will increase product sales and profits; and the product will reach new target groups and have a strong competitive edge over your competitors products on the market.
The chance to co-operate with other license holders is a further advantage that will open up new marketing channels.
What is a Product License?
A product license is an agreement that grants you the right to use generally recognised trademarks,images, films, characters or celebrity personalities in association with your products, publications or promotional campaigns.
The licensor retains ownership of the copyright while the licensee (the customer) purchases the right to use the trademark in products and campaigns for an agreed period.
What Will it Cost to be a Licensee?
The license is royalty-based, that is, you pay an agreed percentage of your sales income to the licensor for the right to use their brand and associated icons.
The amount payable will vary depending on the product category, where the goods are to be sold and through which channels.
Once the contract has been signed, you will have to pay advance royalties in the form of a guarantee. You will report your sales figures every quarter. If the royalties to be paid exceed the guarantee, you will be invoiced for the excess.
How Does a Business Apply to be a Licensee?
To become a licensee of one of Licensing Matters’ clients you will need to provide a business plan including a description of the product range you propose will carry the license, where you intend to sell it and value of business you forecast for the term of the agreement you are seeking.
We will also need you to provide information about your quality systems and your supply chain management.
And finally we will need sight of your financial status.
All of the above will be turned into a “Terms Sheet”: a note confirming the prospective licensee’s intent to pursued an agreement and the scale of that commitment.
Once a prospective licensee’s Terms Sheet has been examined and approved by the Licensor, they will be sent a contract.
The contract will specify the royalties payable, a distinct market area, a product description and a guarantee, the size of which will depend on projected sales during the term of the agreement.
After the contract has been agreed and signed by all parties, the new license holder will receive the licensed product guidelines, logos and graphics that have been licensed for use.
Product design and development can then begin. In order to ensure that the licensed material has been used in an appropriate manner, license holders must send product design work to Licensing Matters for approval before production can begin.
Only when the licensed products and packaging are approved can they be manufactured and sold.
In some cases, licensees will be required to subscribe to the licensor’s authentication service and to apply approved labelling to their products.