Everyone in the UK licensing industry was shocked when Martin Yaffe announced it was going into administration. We are not party as to the causes of this but we think several factors may be at play. Rapid expansion is one factor and in uncertain times acquisitions need to be fast and have an immediate benefit without wrecking cash-flow. We also think that Licensors and Licensing Agents need to better understand what is happening in the marketplace. We question whether they are prepared to reduce royalty rates when raw material prices to go up and we question whether they can be flexible on royalties rates when a retailer is pushing for higher margins. In the 90’s when licensing was relatively easy, stepped royalty rates were fairly common. Maybe we should be looking at tailoring royalty rates to specific markets and opportunities again. After all the royalty pie is getting harder to divide and we all need to work in partnership to maximise profits.