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Licensing Jargon Explained

  • Advance

    A percentage of the predicted royalties, which is paid on signature of the licence. Licensors impose an advance as a defence against a licensee taking a licence and then not doing anything with it. Sometimes, there is a sting in the tail when a licence renewed and a second advance is required.
  • Approval

    All designs, products, colours, marketing literature and treatments of a property are subject to strict approval processes by the licensor or agent. The approvals procedure will be defined in the licensing agreement.
  • Classic

    The term usually given to such established names as Peter Rabbit, Thomas, Pooh, Barbie, Coca Cola. In other words, properties showing consistent sales and enduring popularity.
  • Geographical Scope

    Study the exhibiting manual that the fair organiser will provide. In addition to the mass of useful information it will usually include the critical order forms that remind you of things you should consider and possibly order.
  • Guarantee

    This is a negotiable sum, paid by the licensee to the licensor as a commitment to generate a minimum level of royalty income over the term of the licence. Any shortfall must be made up at the end of the term of a licence.
  • Infringement

    Taking action against copyright infringement is costly, but the licence agreement should state that the licensee should alert the licensor to any infringement and discuss in good faith whether to take action, how the costs of taking action should be apportioned and how the damages awarded would be apportioned.
  • Licence

    The permission to use an image, brand or character on a product. Defined by a licensing agreement, a licence is awarded by a licensor to a licensee.
  • Licensed Product

    The product on which the licensee has been permitted to use the brand or character. The nature of the product is usually very specifically defined by the licensing agreement (eg boys socks, ages 3-12).
  • Licensee

    The party (usually a manufacturer or retailer) which pays for a licence and then makes and distributes a product bearing that brand or character.
  • Licensing Agent

    An agent appointed by the licensor to co-ordinate a licensing campaign.
  • Licensor

    The owner of the intellectual property rights in the brand or character.
  • LIMA

    The Licensing Industry Merchandisers' Association: 020 7082 0802 This is the industry body for the licensing industry. Most active in the USA, it now has representatives and members in the UK and Europe.
  • Minimum

    A licence is usually subject to achieving a minimum level of sales per year and may state that if a licensee does not sell a certain number of goods in any period, then the licence may be terminated. Minimums can vary according to the territory of a licence. In order to set realistic minimums, licensors should find out from a licensee how many units it expects to sell in each country or continent that the licence is to cover.
  • Property

    This is the generic name given to all things that can be subject to licensing.
  • Royalty

    A payment expressed as a percentage of sales (negotiated in advance), paid by the licensee to the licensor for using the brand or character. Most agreements require licensees to produce royalty statements and to pay royalties each quarter.
  • Royalty Auditing

    In order to ensure that the correct royalties are being paid, a licensor has the right to inspect a licensee's books and records.
  • Style Guide

    The bible of the property giving all the visual and design references a licensee should need to be able to use the property correctly on their products. Compiled by the licensor or agent, it often includes brand values, ideas for point of sale and packaging, history of the property, etc.
  • Term

    This is the period of time for which the licence lasts. Licensees often renew their licences, or are given a 'sell off' period during which they can sell off any remaining licensed products. Licensors will ensure they have the power to terminate the licence if a licensee is not meeting certain performance criteria such as selling sufficient goods, committing appropriate funds to promotion or maintaining quality standards.
  • TV Ratings

    These are used to measure the popularity of a programme on TV and record the number of people watching. The main source of audience research in the UK is BARB (the Broadcasters' Audience Research Board), which represents the BBC, the Independent Television Association (ITVA), Channels 4 and 5, Sky and the Institute of Practitioners in Advertising (IPA). TV Ratings are expressed as a percentage, for example a TVR of 4 means that 4% of the population were watching a particular show. The percentage share of viewing figure indicates what proportion of all those watching television at the time chose to watch a particular programme. For instance, if a programme took a 34% share of viewing, this means that of the total number of people watching TV at the time, 34% of them chose to watch that particular programme. The 'Gold' industry standard data is the Consolidated Data, which includes those who watched a programme at the time of transmission as well as the people who recorded the programme and then went on to watch it within the next seven days