Licensing is a way to allow others to use your designs or images (your 'property') on their products, while you keep control of the copyright. A licence is a legal agreement which allows the owner (the licensor), of the property to grant a manufacturer, or a retailer (the licensee), the right to use the property on specific products, usually in a defined territory over a defined time period.
The financial return to the licensor normally takes the form of a guaranteed fee and/or royalty on a percentage of the sales of the product.
For licensors, the advantages include being able to enter new markets (product or geographical) which would be unfeasible with it's own resources or capabilities. It is a way to generate new revenue streams, often with little involvement or additional financial or other resource implications and can be an excellent earner.
Take, for example, a charity Christmas card licensing deal: the charity agrees to allow its name (brand) to be used on greeting cards in return for a percentage of the trade price. This way it raises its profile on the high street and earns additional income, without having to make any investment in product, or taking the risks involved in publishing the cards itself. In this case it is the publisher which is the licensee.
Greeting card publishers are becoming increasingly involved in the licensing market, both as licensees and licensors.
The Four Basic Tenets of Licensing Agreements
An agreement will cover four basic areas:
- Product(s) - the products on which the design can be used eg greeting cards, mugs, or T-shirts
- Term - the length of time the licence contract lasts (after which the rights revert back to the artist/owner of copyright). Usually this will be at least two years, to give the licensee time to exploit the design properly
- Territory - the country or countries to which the licence applies
- Money! Royalties - a percentage of the trade price. These vary from 4-12% depending on the quantity and value of the product being made. Royalty rates can rise to 15% for the properties which are most in demand (usually entertainment ones, eg Disney characters).
Useful Resources/Information
LIMA is the Licensing Industry Merchandisers' Association: 020 7082 0802, www.licensing.org. This is the only industry body for the licensing industry. Most active in the USA, it now has representatives and members in the UK and Europe.
Licensingpages www.licensingpages.com is a business resource that helps the activities of brand owners & agents, licensees, retailers and all the support organisations that underpin the brand & licensing industry. It provides members and users with insight and direction into all aspects of licensing as well as providing a range of special commercial tools to aid day-to-day activities. Licensingpages also publishes the directory for the industry which is sold and distributed in 64 countries.
The Licensing Source Book is a lively, colourful source of information about the licensing industry linking licensors, licensees and retailers. Published twice yearly in Spring and Autumn. For further info contact Ian Hyder: 020 7700 6740, ianh@max-publishing.co.uk
Licensing Events
Brand Licensing Europe 2008 is the leading pan-European event for licensing and brand extension. Exhibitors at Brand Licensing Europe showcase their images, artwork, designs, brands and characters, to an audience of around 4300 European retailers, licensees and promotional marketers who are actively seeking new licensing opportunities. Brand Licensing Europe 2008 takes place from October 1 - 2 at The Grand Hall, Olympia London. Visit www.brandlicensingeurope.com for further information and to register.
Seminars
Running in May and October, the LIMA UK Licensing Essentials Course is a full day foundation in the fundamentals of licensing. Covering everything from terminology to techniques and retailers to royalties, the course is designed for anybody who is either new to licensing or simply needs a refresher. For more information visit www.brandlicensingeurope.com/lima or call 01244 393 454.
Print this page
