Brand licensing grants a licensee exclusive right to manufacture, distribute and retail approved products in return for payment – typically a royalty and guarantee based on wholesale sales as specified in the licensing agreement. 

 

The licensor retains the ownership while the licensee gets the right to use the brand  in products for an agreed upon period. 

Using a well-known brand, personality or character will generate immediate market recognition for your products.

 

This will increase product sales and profits; licensed products will allow you to reach new consumer groups and give you an edge over your competition in the market. 

The licensing agreements are based on royalty which means that you will pay agreed upon percentage of your wholesale income to the licensor to get the right to use the brand name. 

 

Licensing agreement has an agreed upon minimum amount of guaranteed wholesale. This minimum amount and the percentage of royalty depends on the product category and where the goods are to be sold and through which channels. 

 

Once the contract has been signed, you will have to pay advance royalties in the form of a guarantee. You will report your sales figures every quarter. If the royalties to be paid exceed the guarantee, you will be invoiced for the excess royalty.

To become a licensee, you will need to provide a business plan. Business plan will include interested product range that you want to get a brand license, in which country you intend to sell the product, the estimated number of years you want the right to use the brand name for the product and finally we will need sight of your financial status. 

 

The above information will be converted into “Term Sheet” which confirms the prospective licensee’s intent. The brand will examine the Term Sheet and if the brand approves, the prospective licensee will be sent a contract.

 

The contract will specify the royalty payable, market area, products and guaranteed wholesale sales. Once the contract has been agreed and signed, the licensee will receive the licensed product guidelines, logos and graphics that have been licensed for use. 

 

The licensee can now begin the product design and development. The designs and products has to be approved by Crea to ensure the appropriate use of the license. The manufacture and sale can begin after the approval of the designs.