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• Do you have the right to license?
• Understand the worth of your brand or property
• How will licensing benefit your marketing strategy?
• Do you need an agent?
• Selecting product or service categories
• Selecting a manufacturer or licensee
• The licensing agreement
• Working with a licensee
• Protecting your investment

Do you have the right to license?

As a licensor, the very first thing you must do is to confirm that you actually own a licensable property. You should only license a property that is capable of being legally protected, which means that it is either trademarked or copyrighted.

Despite having some kind of trademark "Any sign capable of being represented graphically, which is capable of distinguishing goods or services of one undertaking from another" (UK Trade Marks Act 1994), the majority of manufactured goods/services go formally unregistered. Trademark registration is not harmonised in Europe or across the globe, but it is possible to register and to verify trademarks in many countries. It can be an expensive and timely business and successful registration is by no means guaranteed. Failure to gain registration does not necessarily stop you from using your mark, but can mean you can't stop others from doing so either, unless you can prove they are "passing off". The issue is therefore very important to the licensee, as contractually it's paying you for the use of this mark.

Originally set up to protect the copying of literacy, dramatic, musical or artistic work, copyright concerns the expression of an idea, rather than the idea itself. Copyright generally lies with the creator of the work. A plaintiff bringing action for infringement needs to show that actual copying took place rather than just taking an idea from it. As such copyright registration is not very common, although some countries, including the US and UK, do allow it and have laws of governance particularly relating to the length of time a copyright can last.

Details about Patents, Trademarks, Design and Copyrights appear in the Legal Resource.

The appeal of your brand or property to potential licensees lies in its inherent appeal to consumers and its values, personality, tone and overall benefits it promises or infers. It is therefore vital to really understand the key attributes, strengths and weaknesses of your property or brand and what audiences (qualitatively and quantitatively) use or consume it and how it compares to any competitive properties that licensees could be interested in.

Find out about articulating and expressing brands in Brand Matters.

Aside from the lure of new revenue streams, it is important to consider the other benefits and possible risks that licensing activity could incur and how it fits in with your overall marketing activity and commercial imperatives.

The product or service categories your licensing activity enters into and the products or services themselves can potentially both give significant value or potentially be detrimental. For instance, if an element of your brand or property's equity has been eroded - maybe it has become a little outdated or it is not seen as healthy or active - a licensed fashion item or healthy food association may help to rebuild its equity. Similarly if your brand or property has lost appeal to a particular target audience or you wish to expand your audience you may want to choose a license category and particular product or service of which this audience is a heavy consumer or user. Are there particular retailing outlets where you require more exposure and where a potential licensed product could be placed?

It may be tempting to cut out a middleman and do all of the licensing activity yourself. Whilst by no means impossible, you need to carefully consider all the implications and exactly what time, money and resource you'll need to do successfully license your property. A licensor will need to market to both manufacturers and retailers to convince them of the strength and potential of its property and to fully understand the market place and competitive pressures. Remember there are hundreds of good ideas but finite shelf space. You will need to persuade them to invest in your property above others and this requires detailed understanding of the market and the needs and motivations of the retailers and manufacturers themselves. The advantage of Agents is their intimate knowledge of the market, their contacts in the industry and often their reputation based on previous successes.

To look for agents and find out which ones operate in different property categories refer to The Directory.

The category your brand or property operates in may obviously drive you towards licensing in particular relevant product or service categories. For instance, if you have a property aimed at children, toys would be an obvious area. However, your brand's values and personality and your marketing objectives should drive your selection. The "Types of Licensing" section gives details on the different options open to you.

The easiest way of finding out what manufacturers and other licensees exist is to look in The Directory which gives you basic details about licensees in each country and what they make or supply. Alternatively our WorldClass Licensees section exclusively lists licensees that match certain criteria on turnover, licenses held and territories in which they operate. They are listed by category and by country.

Ensure too that your own contact details and properties are kept up to date in The Directory, so licensees interested in particular properties can approach you more easily.

In addition to their production capabilities it is vital to understand and be confident of a supplier's quality and of their distribution. A manufacturer's products may only be suitable for and listed at particular retailers. Remember the price level, quality and point of sale will also reflect on your brand or property.

The licensing agreement between a licensor and licensee is a legally binding document to protect the interests of both parties. Whilst agreements will vary according to each deal and sometimes in accordance with government or legal rules pertaining to different markets, the fundamental points of a licensing agreement refer to the licensor ascribing the right to the licensee to manufacture items incorporating the licensor's brand or property and which may be sold in a particular territory, for a set period of time in return for a payment. The licensing agreement is prepared by the licensor and will be approved or amended by the licensee.

The schedule of a licensing agreement or contract may include details of:

• The Licensee and their registered office and company registration details


• The Licensor's product


• The licensed properties - the copyrighted works such as the logo type, phrases, look; trademarked works such as the actual logo, character designs etc


• Which retail outlets the licensed product maybe sold in


• The licensed products which maybe manufactured e.g. clothes - underwear, socks and t-shirts only


• The publicity material - what promotional advertising and packaging material that will promote the licensed product


• The Licensee's selling price (wholesale price to retailer)


• The deemed minimum selling price (to consumer)


• The territory in which the products may be sold


• The start and finish dates of the agreement


• The advance required e.g. £10,000


• Advance payment date e.g. 50% on signature, 50% in 6 months


• The royalty rate e.g. 10% of net receipts from sale of licensed products plus VAT


• Distribution date - the date by which the licensed products will be available for shipment to retail outlets


• Marketing date - the date by which the licensed product will appear in retail

An agreement will also include all the details relating to the approval of licensed products or publicity material; payment of royalties and statements of account; indemnities; assignment of sub-licenses; termination and many other vital clauses.

It is essential that an on-going dialogue and relationship with a licensee is maintained after contracts have been signed. You should supply a licensee with as much information about your brand or property as you can so that they are confident about all aspects of it that will affect the production process, especially relating to its personality and the overall look and feel that needs to be achieved.

You should supply your licensee with brand or style guidelines to help the process and be prepared to monitor and consult on the production process - from design to packaging. You should provide marketing data and frequently update the licensee on your own activity, looking at possible tie-ins to make activity work harder. You should also help the supplier with their sell in and discussion with retailers, providing details about the property, it's appeal and marketing support. You may also be able to assist in any point-of-sale material and in-store merchandising programmes.

You can find out about Brand Style Guides and other ways to express your property in Brand Matters.

Once the licensed product is in-store the licensor should ensure it has facilities to monitor its progress. Successful products can fall prey to counterfeiting and other infringement. To protect the worth of your property and to protect future licenses it is important to protect your property against infringement, pursuing with litigation as necessary. Licensor who don't, not only reduce their potential income but that of their licensees. Future deals may become more difficult.

You can find out about ways to protect your brand in the Brand Protection section in Brand Matters and also in Legal Resource.

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