Licensing

licensing Licensing means renting or leasing of an intangible asset. Brand licensing is the process of creating and managing contracts between the owner of a brand and a company or individual who wants to use the brand in association with a product, for an agreed period of time, within an agreed territory.

Reasons for licensing A company chooses to license their brand when they know that their brand has consumer preference. Through licensing, brand owners have the ability to enter new categories practically overnight, gaining them immediate brand presence on store shelves and often in the media By licensing their brands, companies are able to satisfy consumer needs in categories that are not core to their business.

Some licensors see licensing as an opportunity to "test" the viability of a new category without having to make a major investment in new manufacturing processes, machinery or facilities. In return for the use of their brand, companies charge manufacturers a fee in the form of royalty payments and guarantees that constitute a source of revenue for the company. Brand licensing also provides marketing support to the core business.

Types of licensing Exclusive: Where only the licensee will market/manufacture/operate the product itself. Sole: Where the licensor agrees not to grant any other licenses but retains the right to market/manufacture/operate himself. Non exclusive: Where the licensor can grant any number of licenses and may market/manufacture/operate the product himself.

Advantages Dividing the work load Technology access Accessing more markets Licensor retains ownership and receives royalty at the same time

Disadvantages Licensor depends on the efficiency of the licensee. Dependence is even greater in the case of exclusive license. Licensee can cannibalize licensors share – reaching the market more quickly. Licensee may require sudden assistance (technical, training personnel, technical data)

Few Points To Consider Before Going To Licensing Category Alignment Is your program licensed in the right categories? Does the brand have permission to extend into the existing licensed categories? (consumer focused)

Contd . Licensee Search and Suitability How are you prospecting licensees to ensure you are finding the best suited to support your program? Where do you look for information when prospecting licensees? What parameters are used to shortlist licensees from the universe?

Contd Category Management How often are reviews conducted with each licensee to ensure they are meeting their objectives? Annually? Quarterly? Monthly? What questions are being asked in the review? Who from the licensees’ side is attending the reviews?

Licensee Orientation and Alignment Is there a robust orientation program in place? If so, who attends the orientation and when does it take place? How often do you meet with the licensees individually and collectively?

Contd Contract Quality and Accuracy How robust are the contracts you currently have in place? Do they accurately reflect the deal terms and procedures being practiced? When do your contracts expire? Is there proper succession planning?