Licensing Definition

Definition: A business arrangement in which one company gives another company permission khổng lồ manufacture its hàng hóa for a specified payment

For example, about 90 percent of the $160 million a year insales at Calvin Klein Inc. comes from licensing the designer"s nameto makers of underwear, jeans and perfume. The only merchandise theNew York-based company makes itself, in fact, are its women"sapparel lines. Many large corporations, such as the Walt DisneyCo., generate less significant proportions of their revenue fromlicenses. IBM, after energizing its efforts to license itsthousands of giải pháp công nghệ patents a few years ago, now attributes $1billion a year of its corporate sales to lớn licensing. The downside oflicensing is that you settle for a smaller piece of the pie. CalvinKlein-branded products, for example, generate $5 billion in sales ayear, the vast majority of which goes lớn licensees và retailers.At the same time, licensing revenue tends to be high-margin, withalmost all the fees from licensing flowing straight khổng lồ the bottomline.

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On the other side of the coin, you could be the one with theinterest in licensing the high-recognition brand name of anothercompany. To many, it might seem lượt thích the key lớn a gold mine:Putting a Notre Dame biểu tượng logo, a Lion King character or a Star Warsgraphic on your product means guaranteed success, right?

For a sure thing, prepare for a frustrating tìm kiếm. But ifyou"re willing lớn put some time và effort into lớn making your productwork, buying the licensing rights to lớn a well-known hàng hóa or namecan substantially increase your chances for success.

Licensing is a billion-dollar retail market worldwide. But alicense isn"t a prescription for instant success. It gives you theborrowed interest of a name that is either unique or has someconsumer acceptance, but it still takes good selling and marketingto succeed. A license is, in essence, a tool, and when used well,it"s an extremely cost-effective sầu sale tool.

Licensing offers three major advantages. First, it may mean youhave something quality your competitors don"t. Second, it may meangetting a little better margin because it"s quality. And third, itmay mean that 10 percent of the retailers you Gọi on that you"venever been able to lớn sell lớn will finally take a look because youhave something different. And when that happens, you can sell therest of your line.

Who can obtain a licensing agreement? The danh sách runs the gamutfrom a multinational conglomerate to lớn a one-person operation. But ingeneral, a licensor looks for the strongest company in terms offinances, manufacturing and kinh doanh. The good news for smallbusiness is that strength is not necessarily measured in dollars orlongevity.

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Before you tackle the licensing industry, you need lớn have yourown house in order. Make sure you have or can get financing, ensurethat your manufacturing capathành phố is up khổng lồ snuff, và establishdistribution channels. It"s also a good idea lớn try to establish asales history for your products. Once this is accomplished, thendecide what licensing products you want lớn target.

Once you know who you want khổng lồ target, the next step is talkinglớn the company or its representative and convincing them of yourproduct"s potential. Large organizations will most likely havepeople who oversee licensing and sale or will have turnedthose functions over lớn a licensing agent. You can determine theproper person to lớn speak with by contacting the company directly toask about licensing opportunities.

Deciding which licensor to approach means evaluating yourstrengths. The bigger và more popular the property is, the moreit"s going to cost to secure the licensing rights. Beginners shouldprobably start out small to lớn learn the ropes.

Once you begin approaching companies, many will ask you to lớn fillout a licensing application, and all will ask for a business plandetailing how you propose to lớn market the sản phẩm, who your targetaudience is & what you estimate sales could be. Most licensorswill also request sản phẩm samples.

What happens after the licensor says yes? Most, if not all,companies will ask for a minimum guarantee of sales covering thelife of the contract paid in advance or in installments, and willcharge royalties as well. Royalties are a percentage of sales paidby the licensee to lớn the owner of a property or a designated agent,usually based on the net wholesale selling price. Some licensorsare willing khổng lồ negotiate these fees; others are not.


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