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FAQs
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What is an example of licensing?
Examples of licenses include a company using the design of a popular character, e.g. Mickey Mouse, on their products. Another example would be a clothing manufacturer like Life is Good licensing its designs and brand in a certain country to a local company. -
How do you negotiate a licensing agreement?
Do your homework. Before you begin negotiating, you need to understand your licensee's business. ... Start with a term sheet. ... Manage your expectations. ... Be patient. ... Have a win-win attitude. ... Don't lose your sense of humor. ... Remember to hold something back. ... Put yourself in their shoes. -
How do you write a licensing agreement?
Download a template for a licensing agreement. Choose your role as the licensor or licensee. Define the license(s) in the agreement. Decide whether the license is exclusive or not. Settle the matter of fees and payment schedule. Add a renewal date and rules. -
Why would a company use a licensing agreement?
In other words, a licensing agreement grants the licensee the ability to use intellectual property owned by the licensor. Licensing agreements are commonly used by the licensor to commercialize their intellectual property. -
How does a licensing deal work?
Licensing involves obtaining permission from a company (licensor) to manufacture and sell one or more of its products within a defined market area. The company that obtains these rights (the licensee) usually agrees to pay a royalty fee to the original owner. -
What is the average licensing fee?
Royalty rates vary per industry, but a good rule of thumb is between 2-3% on the low end, and 7-10% on the high end. I have licensed consumer products for as low as 3% and as high as 7%, with 5% being the most common and a generally fair number. -
How do you structure a licensing agreement?
Download a template for a licensing agreement. Choose your role as the licensor or licensee. Define the license(s) in the agreement. Decide whether the license is exclusive or not. Settle the matter of fees and payment schedule. Add a renewal date and rules. -
What is included in a licensing agreement?
A licensing agreement is a legal contract between two parties, known as the licensor and the licensee. In a typical licensing agreement, the licensor grants the licensee the right to produce and sell goods, apply a brand name or trademark, or use patented technology owned by the licensor. -
How do licensing agreements work?
A licensing agreement is a legal contract between two parties, known as the licensor and the licensee. In a typical licensing agreement, the licensor grants the licensee the right to produce and sell goods, apply a brand name or trademark, or use patented technology owned by the licensor.
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Music Stephen King here thank you for watching thank you for subscribing tell all your friends we've got the greatest information school save you time money and heartache by watching in DIRECTV okay here we go it seems like everybody loves the mistakes that I've made so I'm gonna share a few more in fact I'm gonna go a little deeper in some some of the bad mistakes I made so here you go everybody I'm going to talk about making mistakes when you're signing a licensing agreement right before you sign it what happens after but signing a licensing agreement if you make these mistakes it could be huge now I haven't made all those mistakes so I'm going to talk about but I have made a few okay so the first one I want to talk about realize signing the licensing agreement is reason to celebrate it truly is you've done everything right you've put together you've come up with a great idea congratulations you've got great marketing material companies likes it you reached out to and now they want to do the dealing fantastic but realize this is not going to be easy and it's gonna take a long time and when that contract first comes over to you it's gonna be so ugly you're gonna want to pull your hair out in fact you're gonna go what do you mean this is not what we talked about I can't sign this so don't don't panic that's take a deep breath you'll get through it okay but it's gonna take a lot longer than you think and it's gonna cost money yeah I know I said it's gonna cost money but this is maybe part of time where you spend a little money because if you do it wrong here you just wasted so much time and don't do that but I'm gonna show you a couple tips that can save you some money okay so realize it's big picture number one it's gonna take more time than you think be patient right have someone number two have someone help you absolutely all this other stuff I think you can do yourself but when it comes to a licensing agreement I've done for over thirty years you need help now what I'm going to also tell you there's way to kind of shave that bill find someone that can help you negotiate the business terms that's the first thing it's business terms royalty rates minimum guarantees performance clauses it's the money terms you need someone that can help you that has business experience of what those should be and how to ask for it right and the second thing you're gonna bring in as a licensing attorney for all the legal terms there you go and that guy who's gonna be really expensive but if you bring him in when you've negotiated most of it you're gonna reduce your overall build it's very very simple don't have a licensing attorney I love these guys but don't have them negotiate your contract that's foolish maybe he can help you with some of the legal terms but if you don't know the business terms and how to negotiate and you try to do it on your own it's not gonna go great okay so that's number two number there were three do not start with big items in the term sheet I've seen that before you guys and just doesn't work it doesn't work very well there's always gonna be these big issues like performance clause there might be ownership of well that's a want to check with your intellectual property there might be some other things minimum guarantees that's another thing those are really big ticket items you don't wanna go she ate up front you want to negotiate later in that process so don't do that that's number three and realize well now I got a number four here have a life yeah like I said before a year you're gonna need that licensing attorney but not to negotiate to deal all right here's some of the mistakes I made or some of the mistakes I've seen first mistake that I've seen over and over and over again never signed a licensing agreement in your name that's right it's got to be in some business entity I prefer LLC it's really easy to do it's very very affordable I love that type of structure very simple but never do it in your name I see that all the tack don't because you'll be personally liable that's right so find out in your state of how to file an LLP and in most states it's very very very affordable California which I no longer live and it's very expensive but Nevada where they've been now is very affordable but don't do it in your name I see it all the time okay that's number one two three four number five don't write your own contract don't write it or even have someone write it for you to submit to these guys they're gonna want to write their own contract but guess what I made a mistake there is a deal that came in I had a lot of experience I really didn't care about this technology too much it was kind of a carve out of a bigger technology no big deal so guess what I've been around long enough and I Frankenstein the contract since it over don't do that because it's not worth that much effect it was stupid it was too vague right and that causes problems and it cost me a few bitches too so don't do that I don't care if you think you can do it don't cannibalize the licensing agreement you find in the Internet don't do that have the cup of your license in it to submit it to you even though it's gonna be awful that's okay but they need to spend the money to send it to you okay next minimum guarantees I love minimum guarantees and my first deal James go ahead with the Michael Jordan wall ball up here guess what I didn't have any minimum guarantees she's so happy I had a deal but it didn't come back to bite me in some situations I have seen this hurt people but because Michael Jordan is so well known and the company licensed the to Ohio arc does such a great job and I sold for ten years it didn't matter if there's any minimum guarantees there at all guess what because I didn't own anything I filed for zero intellectual property they were just being kind great company there but guess what there isn't looking back there's no minimum guarantees they could have stopped it tomorrow but Sola I really didn't care I was just happy to sign that deal but if you have invested a lot of intellectual property if you have invested a lot of time you have to make sure there's some minimum guarantees in there and the reason why if you don't have that type of performance clause they can just walk away not sell one and they own it there you go they own it so you got to have it here's another tip that this is nothing another mistake - mistakes that are made sometimes when you do sign a deal that if it goes to a non-exclusive it might go if it goes from an exclusive to a non-exclusive right they don't hit their mineral guarantees but in the clause it says if we don't get our member guarantees we don't have an exclusive but we have them we have a non-exclusive I made that mistake don't do it I made that mistake here's the second mistake I made it guess what it didn't have any power then because when I tried to license it to another company I couldn't give them an exclusive because I did a non-exclusive with that one company said it right there made a mistake didn't see it didn't realize that when you could give someone exclusive it has more value so when that company did not hit the minimum guarantees came back to me but they still had rights to sell it there's my mistake um let's see top-loading a deal let's talk about top-loading a deal there's some industries that will give you an advance and one of them's a toy industry and I remember one time when I was early on starting out what one company worlds of wonder which I was working there and I left and I came back as a freelancer and I started submitting my own ideas that was one of the reasons why I have left they gave me fifteen thousand dollars for a product called having surprise and it James if you can find that awful idea that they paid me fifteen thousand dollars for it would be remarkable hopefully James can find it but guess what Dave in the toy industry they they will pay you some money to hold it and that was a holding fee that $15,000 was not even a top-load they $15,000 and we're gonna hold it for three months but whenever you asked for money up front right you have to realize your top loading the deal and those guys rather pay you on the back end but I rather you say look instead of and this is what I do for most of the companies don't pay me upfront money don't pay me that money for me to go buy a car why don't you pay me money they help me pay for my patents or maybe help for pay for some of the paths I filed in the past because that way it's really it's more about partnership you're going forward with some really good business strategies rather than saying hey give me the 20 grand I'm gonna buy a new car don't do that the next thing I want to talk about I think I'm just bucking it to the end it's a performance clause now I did this right right and did a couple of mistakes along the way after all these years but this is one thing I did right I'm very proud of having the performance clause of minimum guarantees are extremely important but the one I forgot I want to say it's not performers close but I want to say any improvement clause I'm sorry improvement clause and the reason why that's important to me is that they're gonna make improvements and you have to own them you really do and the reason why in case the contract gets breached and you get it back and they in the own some of the improvements then then you've got some issues you have to have access to those improvements now there's a couple different ways you can structure it I don't have time to talk about those issues but the bottom line is this you're the inventor you've come on with an idea there's going to be improvements you need to own them that's not easy to negotiate that's why you need someone with a little bit of experience to help you with that okay I talked a lot there's quite a few other things that gonna probably mention hopefully this helps so in a nutshell it's really really fast you guys contracts are fantastic you can do it celebrate don't celebrate too early until it's signed get something that can help you do it with the business terms and they bring in a licensing attorney at the very end to make sure everything's done right don't put it in your name not a great idea don't talk low deals companies don't like it unless it's maybe in the toy industry make sure there's minimum guarantees so if they they don't get it they don't reach it you get it back make sure there's an improvement clause in there that if they make an improvement you still own it there you go hopefully I went through most of those shared a little heartache of some of the mistakes I made once again Stephen key thanks for watching keep on subscribing to better my TV thank you hi this is Steven key and I just want to thank you for watching and fit right TV we're here to save you time save you money and show you how you can bring your products to market through licensing so please subscribe down below 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