Licensing is delineated as the process of hiring a copyrighted or trademarked entity for use with a product or service. The property could be anything from the signature of someone famous to a picture, graphic or logo. A business contract is signed between the owner of the trademark or copyrighted material and the person who wants to lease it. These people are called the licensor and licensee respectively.
Why would anyone wish to license an entity? Simple answer is to increase their sales. Some brands attract such high client loyalty that you could sell almost anything once you have that image or logo or signature on your product.
The licensor is usually motivated by the cash they could make but this is not always the only reason. Market penetration could be a bigger issue. For illustration, if a new movie is being produced, the producers know that having stacks of toys or goods related to the movie in shops will help to augment the publicity around launch date thus resulting into an increase in box office takings.
Licensing also provides the licensor a chance to move into related product areas without having to incur the cost of product design or development. They may be hunting to break into new markets for instance a US product launching in China but due to limited knowledge of the new market they will wish to test it out first via a relatively low risk inexpensive route like licensing. If the new market loves the product, they know they have just leased the brand for a short length of time and are collecting a percentage of sales. Once the time limit is over they can move into that market themselves. If the new market isn't successful, they have still got revenue from leasing the brand but they haven't wasted any money trying an indifferent marketplace.
Obviously the licensor have to protect their brand first and foremost so there will be extremely strict quality controls put in place to cover this issue. The other common elements to a license will be a specific geographic location i.e. you cannot simply trade wherever you desire. The contract will also stipulate the timeframe the license has been granted for, the conditions for renewal, the agreed contract price and conditions of payment - this is usually a percentage of sales subject to a lowest value i.e. you end up paying a specified minimum amount even though you don't sell anything. But if your product sales take off, you will pay a certain percentage back to the licensor. There will also usually be an agreement over how many licenses will be issued for that particular area i.e. you could have a sole license or be permitted to license additional people.
People who wish to take up a licensing contract do so because they believe that they have found an ideal market for that product but couldn't finance the operation themselves. Or they may have manufactured a new product that will do much better having been associated with that brand name for even a short period of time. Making reputation in the business is important, nearly as important as being 100% sure you understand the licensing process and know exactly what you are getting into prior to signing the deal.
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Why would anyone wish to license an entity? Simple answer is to increase their sales. Some brands attract such high client loyalty that you could sell almost anything once you have that image or logo or signature on your product.
The licensor is usually motivated by the cash they could make but this is not always the only reason. Market penetration could be a bigger issue. For illustration, if a new movie is being produced, the producers know that having stacks of toys or goods related to the movie in shops will help to augment the publicity around launch date thus resulting into an increase in box office takings.
Licensing also provides the licensor a chance to move into related product areas without having to incur the cost of product design or development. They may be hunting to break into new markets for instance a US product launching in China but due to limited knowledge of the new market they will wish to test it out first via a relatively low risk inexpensive route like licensing. If the new market loves the product, they know they have just leased the brand for a short length of time and are collecting a percentage of sales. Once the time limit is over they can move into that market themselves. If the new market isn't successful, they have still got revenue from leasing the brand but they haven't wasted any money trying an indifferent marketplace.
Obviously the licensor have to protect their brand first and foremost so there will be extremely strict quality controls put in place to cover this issue. The other common elements to a license will be a specific geographic location i.e. you cannot simply trade wherever you desire. The contract will also stipulate the timeframe the license has been granted for, the conditions for renewal, the agreed contract price and conditions of payment - this is usually a percentage of sales subject to a lowest value i.e. you end up paying a specified minimum amount even though you don't sell anything. But if your product sales take off, you will pay a certain percentage back to the licensor. There will also usually be an agreement over how many licenses will be issued for that particular area i.e. you could have a sole license or be permitted to license additional people.
People who wish to take up a licensing contract do so because they believe that they have found an ideal market for that product but couldn't finance the operation themselves. Or they may have manufactured a new product that will do much better having been associated with that brand name for even a short period of time. Making reputation in the business is important, nearly as important as being 100% sure you understand the licensing process and know exactly what you are getting into prior to signing the deal.
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Are you yearning for the good old days and hoping to rekindle a lost romance? Are you interested in giving a tumultuous relationship another chance?
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