How Licensing Works. The established company brand or designer, defined as the licensor, offers its trademark to other firms making different types of products. The second company, known as the licensee, agrees to manufacture and distribute the new product lines .
What is licensing in fashion design?
Licensing in the fashion industry is when a brand (ex. Dior) gives permission to a company (ex. Luxottica – who makes eyewear) to use their name on merchandise.
How does apparel licensing work?
Basics of a Merchandise Licensing Agreement
Typically the licensor and licensee put together the best written agreement so they can both profit . The licensor usually garners extra income and publicity, while the licensee obtains a chance to benefit from an association with the licensor’s properties.
How does licensing a brand work?
Brand licensing is the act of giving permission for another company to use your business’s intellectual property (IP) . Brand owners lease their patents, software, or characters to other companies. Licensees can re-sell the IP at a higher price or manufacture merchandise with the IP on it.
What are the advantages of licensing in fashion?
Potential Advantages of Fashion Licensing: Gain status and credibility with a different group of customers (for example, the successful collaboration between Moschino and McDonalds in 2014, which sold out handbags, iPhone cases, sweaters and backpacks) Increase brand recognition. Target new audience.
What is an example of brand licensing?
Licensing is used by brand owners to extend a trademark or character onto products of a completely different nature . Examples of intangible assets include a song (“Somewhere Over The Rainbow”), a character (Donald Duck), a name (Michael Jordan), or a brand (The Ritz-Carlton).
How does licensing affect designers and consumers?
How does licensing affect designers and consumers? This gives the designer a percentage of the profits of the items sold and enables the consumer the ability to buy designer products .
How do licensing deals work?
A licensing agreement allows one party (the licensee) to use and/or earn revenue from the property of the owner (the licensor). Licensing agreements generate revenues, called royalties, earned by a company for allowing its copyrighted or patented material to be used by another company.
Why is brand licensing important?
Brand Licensing allows brand owners to extend their brand through third parties in a controlled manner . ... Brand licensing partnerships allows brands/licensors to explore and expand into new product lines, which can help in significant expansion of their customer base.
What is a brand licensing item?
The brand license definition is a licensing agreement that gives permission to a company to produce or market a product or service from the original owner . ... The licensee will then produce, promote, and distribute the product or service and, in exchange, the licensor will get royalties from the sale.
What is the disadvantage of licensing?
Disadvantages to the licensor include:
The licensor having loss of control of their intellectual property . The licensor having to depend on the skills, abilities, and resources of the licensee to generate revenues . The licensor being exposed to intellectual property theft by the licensee .
What companies use licensing?
- Disney Consumer Products $13 B. Philip Shaw, SVP, marketing, consumer products worldwide (818) 556-4311. ...
- Warner Bros. Consumer Products $6 B. ...
- Bonjour Corp. $4.6 B. ...
- National Football League $2.9 B. ...
- Collegiate Licensing Co. ...
- Nickelodeon $2.4 B. ...
- Cherokee $2.2 B. ...
- General Motors $2 B.
What are the 3 P’s of licensing?
The 3 P’s of collegiate licensing are protection, promotion, and profit .
Why is licensing better than exporting?
The basic advantage of licensing is the ease with which you can enter a foreign country market . You are, in essence, using the licensee’s management, capital equipment and knowledge of the market to exploit the markets served by the licensee.
What do you mean by licensing?
Definition: A business arrangement in which one company gives another company permission to manufacture its product for a specified payment. There are few faster or more profitable ways to grow your business than by licensing patents, trademarks, copyrights, designs, and other intellectual property to others.
What are the advantages of licensing?
- It creates an opportunity for passive income. ...
- It creates new business opportunities. ...
- It reduces risks for both parties. ...
- It creates an easier entry into foreign markets. ...
- It creates self-employment opportunities. ...
- It offers the freedom to develop a unique marketing approach.
How do I license my own brand?
- Build, protect, and manage your brand and its esteem. ...
- Establish licensing guidelines. ...
- License only to well-managed, well-respected, and well-financed companies.
- Limit licensing partners to one or only a few in each product category or geographic area.
Does LV do licensing?
When a brand owner decides to license his trademark, he will sign a trademark licensing agreement with the licensee . This describes the terms of the licence as well as the royalties.
How does licensing work within the fashion sector?
How Licensing Works. The established company brand or designer, defined as the licensor, offers its trademark to other firms making different types of products. The second company, known as the licensee, agrees to manufacture and distribute the new product lines .
Does Gucci license?
Gucci licenses out its flagship brand for just a few products , such as for eyewear and perfume, keeping a tight grip that many fashion insiders see as the key to its success. The Gucci brand contributes 60% of the Gucci Group’s revenues and 100% of its profits. Mr.
Is a licensing fee the same as a royalty?
Royalties are usage-based payments for using an asset or property. ... Meanwhile, a licensing fee is money paid by someone using someone’s property, but this fee is generally a fixed amount . Royalties can be collected for things that are also licensed, such as patents.
How do you price a licensing agreement?
Royalty rates vary per industry, but a good rule of thumb is between 2-3% on the low end , and 7-10% on the high end. I have licensed consumer products for as low as 3% and as high as 7%, with 5% being the most common and a generally fair number.
What is the license fee?
A license fee is a charge paid when a licence agreement is made between the owner of the invention and the third party . The method of payment of the fee is not limited and can be agreed by the parties, taking into account all their wishes and needs.
What are the benefits of licensing your brand?
- Commercial revenue stream. ...
- Utilising the capabilities of the other party. ...
- Entering new markets/distribution channels. ...
- Increased brand awareness. ...
- Advertising. ...
- Co-branding. ...
- Infringers and Competitors.
How can licensing be defined?
Definition: Licensing is defined as a business arrangement, wherein a company authorizes another company by issuing a license to temporarily access its intellectual property rights , i.e. manufacturing process, brand name, copyright, trademark, patent, technology, trade secret, etc.
What is a brand licensing company?
The Business of Brand Licensing
At its most basic, Brand Licensing is a contractual relationship between a brand owner (Licensor) , and a manufacturer or retailer (Licensee) who develops and distributes a product or service under the brand name in exchange for a fee.
What are the types of licensing?
- Patent Licensing. Patents cover science and innovation. ...
- Trademark Licensing. Trademarks are signifiers of commercial source, namely, brand names and logos or slogans. ...
- Copyright Licensing. ...
- Trade Secret Licensing. ...
- Exclusive. ...
- Non-exclusive. ...
- Sole. ...
- Perpetual.
What are 4 licensing objectives?
1.3 The licensing objectives are: • The prevention of crime and disorder; Public safety; • The prevention of public nuisance; and • The protection of children from harm. 1.4 Each objective is of equal importance.
What is the benefit of licensing?
The advantages of licensing agreement include increasing market share, lowering capital requirements, increasing the return on investment, and decreasing financial and legal risks .
What kind of products can be licensed?
- Clothing and fashion. This is probably the most common medium for artists and a very useful one. ...
- Skateboards. This is also a highly competitive market for artwork. ...
- Surfboards and boogie boards. Think outside the box with this popular medium. ...
- Footwear. ...
- Greeting cards.
What is the most important step in the licensing process?
One of the most important elements of a licensing agreement covers the financial arrangement . Payments from the licensee to the licensor usually take the form of guaranteed minimum payments and royalties on sales.
Is licensing good or bad?
Licensing lets you profit from the process while keeping your company focused on what it does best . Even if you’re using the process yourself, you can make a profit by licensing it in other countries or states, rather than trying to expand. Any legal and financial risks are born by the licensee, not you.
Why is licensing important?
Ensuring your company is properly licensed helps to bring protection to yourself , your employees and your customers. ... A licensed business is completely separate from yourself, meaning your company’s taxes aren’t filed with your own. This makes it far easier to report income as well as businesses losses.
How much can you make from licensing a product?
It’s creativity and productivity on your own terms! Having this type of freedom and flexibility in your life is worth more than money to many of you. And you may not become a millionaire, but you can easily earn $50,000, $100,000, or even $200,000 per year from licensing your ideas when you play it smart.
How do you approach a company for licensing?
- Know your stuff. ...
- Know the downside. ...
- Present like a pro. ...
- Get it protected. ...
- Submit smart! ...
- Analyze your targeted licensee. ...
- Don’t reinvent procedures. ...
- Find a champion.
What is a guarantee in licensing?
A minimum guarantee is an advance payment made by a licensee to a licensor for the right to sell or distribute music or films . If the product linked to a guarantee sells better than expected, the licensee will be obligated to make additional royalty payments to the licensor.
How do you enter a new market?
- Define the Market. ...
- Perform Market Analysis. ...
- Assess Internal Capabilities. ...
- Prioritize and Select Markets. ...
- Develop Market Entry Options.
What are the types of industries for which licensing is not a good option?
Industries that involve high and intense cost pressures must not use licensing because multinational enterprises control and maintain foreign operations that include various joint ventures and subsidiary entities.
