A Licence to Print Money (Part 2)
Tuesday, February 6, 2018
Brand licensing is an effective way to distinguish your brand from competitors. This involves taking a brand you have built up successfully and licensing it to other businesses, which are specialists in products or services outside of your core product or services. In return for these rights you will receive financial payments, normally in the form of royalties on sales of licensed products. Below are 10 factors you ought to consider when licencing your brand.
Top 10 tips to Brand Licencing:
- Use quality brand licensing agents to assist with strategy and selection of potential licensing partners
- Plan your licensing strategy. Short-term high royalty income may harm your brand; consider a long-term brand building exercise, unless your exit plan is short-term
- At first, grant licences to product areas ancillary to the product area in which your brand is situated
- Do not necessarily select licensees who are chasing you. Be selective and be adventurous
- Do credit check/due diligence on licensees. Your brand is in their hands!
- Ensure you have agreed financial targets with your licensees and minimum royalties that are realistic
7. Obtain agreement from licensees on distribution of products. If your products are in upmarket boutiques and their products are being sold in supermarkets there is a brand gap. If your intention is to increase income quickly, this may work. But be aware there is only one way your brand can go …and that is down!
8. Listen to your licensees. They have knowledge about their product areas that you do not have
9. Unless you’ve given a great deal of thought to it, always ensure the market profile of licensees and their distribution is either the same customer profile as yours or a more aspirational one
10. Last and definitely not least, use a lawyer who has experience in drafting brand/trademark licensing documents. This may prove essential!