What is Brand Licensing?
Brand Licensing is a strategic partnership that grants a licensee the exclusive right to manufacture, distribute, and retail approved products under a well-known brand. In return, the licensee makes payments, typically in the form of royalties and guarantees based on wholesale sales as outlined in the licensing agreement. While the licensor retains ownership, the licensee gains the right to use the brand for an agreed-upon period.
How Can Licensing Benefit Your Business?
Immediate Market Recognition:
Utilizing a renowned brand, personality, or character ensures instant market recognition for your products.
This recognition can significantly boost product sales and profits.
Expansion into New Consumer Groups:
Licensed products provide the opportunity to reach new consumer groups, offering a competitive advantage in the market.
What Will it Cost to be a Licensee?
Licensing agreements are primarily based on royalties, where the licensee pays an agreed-upon percentage of their wholesale income to the licensor for the right to use the brand name. The agreement includes a minimum guaranteed wholesale amount, with both the minimum and royalty percentage dependent on factors such as product category, sales location, and distribution channels. Advance royalties are paid upon signing the contract, with subsequent quarterly reporting of sales figures. In cases where royalties exceed the guarantee, the licensee is invoiced for the excess
How Does a Business Apply to be a Licensee?
Submit a Business Plan:
To become a licensee, a comprehensive business plan is required. This plan should outline the product range you are interested in licensing, the target country for sales, the intended duration of brand usage, and your financial status.
Review and Approval:
The provided information is converted into a "Term Sheet," confirming the licensee's intent. The brand examines this Term Sheet, and upon approval, a contract is sent to the prospective licensee.
Contract Details:
The contract specifies details such as royalty rates, market area, approved products, and guaranteed wholesale sales. Once agreed and signed, the licensee receives licensed product guidelines, logos, and graphics.
Design and Development:
The licensee can commence product design and development, with designs and products subject to approval by the licensor to ensure proper use of the license.
Manufacture and Sale:
After design approval, manufacturing and sales can begin, marking the initiation of the licensed product's journey into the market.
Embark on the exciting journey of brand licensing and elevate your business through the power of established and recognized brands.