What Every Retailer Should Know About Brand Licensing

A brand licensing agreement is where two companies come to a mutual and beneficial arrangement. Most of the time, one company is a reputable industry player with a solid customer base while the other is an SME or a new entrant into the market. The larger company agrees to let the smaller company use its trademark on their products. The two companies benefit. The licensee (the company buying the rights to license a brand into the market) sells more products and the licensor (the company selling the lease) gains more customers and gets paid a portion of each sale made. Here is what you should know about this type of agreement.

How a Small Brand Will Benefit

As a retailer, you want to increase your sales value, and brands want to make their name a household name and expand their customer base. So, this makes licensing of a brand a win-win arrangement. This is what will happen; Your brand will grow exponentially, and you will draw in more sales because of the growth in customer outreach. In the process, the customers you manage to attract will relate to your products.

Benefits to the Licensor

The licensor also takes something away from this agreement; increased revenue. Typically, a licensor will receive some income from sales of your product, thus diversifying the company's income channels. You will also be at an advantage when it comes to protecting your brand's image. Instead of letting counterfeits overrun the market, it's better to get into a licensing agreement. You'll be fighting counterfeits and ingeniously maintaining your brand's image.

How Do You Go About Licensing Your Brand?

Protect the Very Essence of Your Business

Had it not been for intellectual property issues, there would be no need for this sort of agreement. The first thing you need to do is to make sure you do not surrender the rights to your products. So, look for a licensee whose aim is to not steal your product. Plus, do they have what it takes to take your business to the next level? If the answer is to the affirmative, then take the next step.

Set the Record Straight from the Onset

This is where the lawyer comes in. Make sure you instruct him to set terms and restrictions that will not disadvantage you in any way. You aim to boost sales, not to relinquish rights to your product. Also, ensure the agreement is legally binding so in case of any breach you can claim damages. This should also include how the royalties will be paid. All in all, this type of agreement should not be disadvantageous to either party. If you feel like you'll lose more than you’ll gain, then don't agree to the contract.