Cash Left on the Table – Tips on Licensing
I don’t know about you but I love to see what is trending in business and how companies achieve rapid growth and penetrate new markets; so last week I went to the Brand Licensing show in London. This event is a melting pot for all types of people who want to cash in nationally and internationally on their creativity. Exhibitors included companies such as Canadian Company Entertainment One, a digital multimedia company and owners of the World famous Peppa Pig, through to Manchester City and the Victoria and Albert Museum.
Licensing characters, concepts, designs, art, names and merchandise is a rapidly growing part of our service economy and events such as this allow artists, creators and potential licensees do business. Take for example Manchester City. Licensing has allowed the club to export globally and they’ve had considerable success recently in North America and China where their loyal fan base is growing rapidly. By providing branded goods and services, they’ve actually increased their fan base significantly. They now have 80 licensees in 32 countries. New players and a new manager have enabled the club to capitalise on its growth and expenditure straight away via licensing.
It was great to see some of our fabulous museums and institutions there too. We have some great British history to capitalise on – even the Trust Shakespeare was there! So if you’re thinking of licensing in a big name to exploit or indeed sharing your creative work in return for a royalty, here are a few tips to consider:
- British Names – we often forget how highly regarded various British names are overseas. A quick look around Leeds or London these days and you will see many overseas students especially the Chinese buying British brand products to use and take home. Jo Malone or Crabtree and Evelyn anyone? Why not make sure you provide them with those brands online when they go back home or find a local distributor or agent who can?
- Trade Shows are often a good place to start to do your research. Find out what other manufacturers or brand owners are doing and go and meet them. As an international trade expert pointed out to me this week, if you want to do business internationally then you HAVE to jump on a plane and go and see your potential clients and find out what they do, what they want and see how you can fit in with them. Trade Shows are a safe and already partly vetted environment in which to start.
- Once you’ve found a target company and done some research on their back ground then we can help you put together some heads of terms upon which to negotiate. Key terms will include the term of the agreement, brand values, any restrictions on the licensee and licensor in the territory and royalties.
- A good licensing deal works for both parties. A critical part of this is getting the financials right. I’ve seen several great licensing deals fail because one party hasn’t considered the details of ensuring the royalty is appropriate and sustainable. Royalty values vary hugely and from industry to industry. Variations arise because of the economic drivers which underpin the business. Additionally issues such as payment terms can have a massive impact on the viability of a deal.
Licensing is one of the most flexible ways of doing business. It allows many creative businesses a way to grow in overseas markets at minimal risk with a win : win outcome for both parties. Is it something you should be doing?
If you want to discuss this or any related Intellectual Property matters, please get in touch with us on 0113 237 9900 (Leeds Office) or 0207 4128372 (London Office).