|
FAQ's
For a manufacturer, what are the primary benefits of licensing?Depending on the type of property you are considering, the benefits differ. For example, the benefits of obtaining the license for a well-known corporate brand name are different than licensing a typical character/entertainment property. Both offer benefits, but the value of the benefits vary from property type to property type. If managed correctly, licensing can be a tremendous sales and marketing tool. As a licensee, a clear understanding of the licensing business and its potential benefits will help you formulate a winning licensing strategy. What are some of those benefits?
The above are just a few of the benefits and there are more. But that is not the point. The point is that regardless of whether or not there is a list of hundreds of benefits, or just one, it is important for you to keep your product line in the forefront. Product is king! If your product is good to begin with, use licensing to enhance it. Do not depend on any license to help sell an inferior product or products driven by obsolete merchandising or marketing plans!
What are some of the possible risks to the manufacturers that are associated with entertainment or character licensing?While the advantages of licensing are many, one must be aware of the possible risks, and more importantly, how to minimize them or avoid them altogether. Here are some of the risks that can accompany an entertainment-based license: First of all there are the financial risks, including:
There is always the risk that the license may disappoint, or worse yet, fail completely. Nobody bats 1,000 in licensing (or in any area of new product development for that matter).. Are there ways to avoid or minimize these risks? We believe that there are definite ways for a manufacturer to protect themselves. Licensing is an effective and creative marketing tool that when used properly, should bring financial success and excitement to your company. There are many benefits to licensing. If you pay close attention to the development and management of your licensing program, you can be sure that the benefits will outweigh the risks. When you call GCI, we will be prepared to discuss all sides of the business.
What are the different property types or different categories of licensing?According to EPM, publishers of The Licensing Letter, the following were listed as property types: Art: Original art and designs. Examples would be Norman Rockwell, Thomas Kincade, Picasso, and Mary Engelbreit. Character / Entertainment: Character/Entertainment: Characters who are best known from entertainment, publishing and toys. Examples would include the Looney Tunes characters, The Simpsons, Sesame Street characters, Star Wars, Winnie the Pooh, Spiderman, Batman, and hundreds of others. Celebrity / Estates: Examples include Albert Einstein, Elvis, James Dean, Marilyn Monroe, and the Three Stooges. Collegiate: Schools who license their names to manufacturers. Examples are Notre Dame, UCLA, Harvard, and hundreds of other NCAA schools, and the various Bowl games and athletic conferences. Fashion: Licenses from the world of design and fashion. Examples are Calvin Klein, Ralph Lauren, FUBU, Tommy Hilfiger, and many others. Music: Elvis, Jessica Simpson, Tim McGraw, the Beatles, and dozens of other artists from a wide range of music and performers. Non-profit: Examples would be American Red Cross, ASPCA, National Audubon Society, American Heart Association, and the World Wildlife Fund. Publishing: Examples would be Good Housekeeping, Playboy, Sports Illustrated, Popular Mechanics, Hot Rod Magazine, Seventeen, Teen, and Rolling Stone. Sports (leagues, individuals): Leagues including the NBA, NFL,NHL and MLB. Individual athletes would include Shaq, Arnold Palmer, Tiger Woods, George foreman, and Lance Armstrong. Also, NASCAR, WWE, Wimbledon, and the Indy 500 would fall into this category. Toys & Games: Barbie, G.I. Joe, Hot Wheels, and Bratz, among many others. Trademarks / Brands: Examples of this type would be Samsonite, Jeep, Harley Davidson, Anheuser-Busch, McDonald's, Coca Cola, Ford Motors, Pillsbury, General Motors family of products and many others. The important thing to remember is that regardless of the licenses you select to apply to your product, treat them as an important part of your marketing plan. By that we mean that the success of licensing is directly proportionate to the amount of work and the quality of the preparation that you put into the project.
Licensing seems to have its own unique language. What are some of the key elements of a licensing agreement?This is a question that is often asked. In Karen Raugust's book, The Licensing Business Handbook, the following concise definitions were given: Advance: Part of the payment required for a license, usually due upon contract signing. Most often, it is a portion of the guarantee rather than an additional payment. Guarantee: A minimum royalty payment, usually based on expected sales. Actual royalty payments accrue against the guarantee amount: Whatever remains of the guarantee after total royalties are tallied is due at the end of the contract period. If royalties exceed the minimum guarantee, no further money is owed. Royalty: The basic form of payment in a licensing agreement; usually a percentage of the net sales price of each unit sold. Royalty Reporting: The act of providing licensors with accurate and detailed information on sales results and royalties due over a period of time. Licensing fee: 1) A flat fee required as payment for use of a license. An alternative to a royalty, generally for promotional or advertising uses rather than retail products. 2) Sometimes used in reference to the guarantee. Net Sales: Amount to which royalties are applied. Usually is the wholesale price to retailers, less certain allowable deductions. Term: Duration of a licensing agreement. Varies, but commonly two to three years for entertainment properties, longer for fashion and corporate trademarks. Sell-off period: A specified period of time after the termination of a licensing agreement during which licensees have the opportunity to dispose of excess inventories of licensed merchandise on a non-exclusive basis. After the sell-off period, the licensee is not allowed to let merchandise reach the market.
What is the average royalty, advance, and guarantee?The answer is that it depends on a number of factors. As for royalty rates, they can range from as low as 1% to as much as 20%. The average ranges from 8% to 12% of the wholesale net price. As for the guarantee, we recommend that a guarantee relate in some way to realistic sales forecasts. There is nothing wrong with asking questions or even negotiating. Understandably, you will find that properties represented by large licensors or properties with a high demand are tougher to negotiate. GCI can help guide you through the process.
Are licensing agreements issued on an "exclusive" basis?Sounds like a very simple question, but it is a question that requires a very long answer. The answer is, "it depends." This is not a very complete answer but if you want to learn more about exclusive grants, call us and we will be happy to give you an answer that fits your specific situation.
What is the difference between a patent, trademark, and a copyright?Thanks to Greg Battersby of Grimes & Battersby, a prominent law firm based in Norwalk CT and renowned for its work in the field of licensing, here are some basic definitions: What is a patent? The grant of a U.S. patent confers upon the inventor the right to exclude others from making, using or selling his or her invention throughout the United States during the term of the patent. In order to obtain any type of patent protection, an invention must be novel and unobvious over what has been invented before. Patent protection in this country is obtained from the United States Patent & Trademark Office in Washington, DC. There are three forms of patents: design patents, utility patents and plant patents. Design patents are granted for any new, original and ornamental design for an article of manufacture. Design patents cover the aesthetic appearance of an invention. The term of a design patent is fourteen years. Utility patents have a term of seventeen years in the United States and cover the functional features of an invention. Utility patents are granted for any new and useful process, machine, manufacture or composition of matter or for any new and useful improvement thereof. Patent protection is governed exclusively by the scope of the claims of the issued patent. Similarly, patent protection is only effective in the country in which the patent has issued. What is a trademark? A trademark is " . . . any word, name, symbol or device, or any combination thereof used... to identify and distinguish one's goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown." Trademark rights in the United States are based on use of the mark, not by registration. Accordingly, common law rights accrue from the date the mark is first used to identify goods or services. However, a trademark may be federally registered with the U.S. Patent & Trademark Office by filing an application to register the mark for certain types of products or services and paying the statutory filing fee. While registration of a trademark or service mark is not a prerequisite to establishing trademark protection for a mark, registration does offer the trademark owner substantial procedural advantages when suing an infringer. Accordingly, registration of a trademark is strongly advised. With respect to applying for federal trademark protection, the U.S. trademark law was amended several years ago to permit the filing of "intent to use" applications. Historically, in order to receive a federal trademark registration, the applicant had to have already commenced use of the mark in commerce. With the revision to the trademark law, applicants can now register a mark with the U.S. Patent and Trademark Office based on a bona fide intent to use the mark in the future. Intent to use applications accord applicants protective rights as of the filing date of their applications, so long as the applicants do, in fact, commence use of the mark and thereby obtain a registration. Unlike patents, which only protect the underlying invention for a finite period of time, trademark protection exists as long as the owner of the mark continues to use that mark. What is a copyright? Copyright protection is provided for original works of authorship fixed in a tangible medium of expression. That means one cannot copyright an idea, only the expression of the idea. The various categories of copyrightable works include: literary works; Copyright rights are limited in duration to a term of the life of the author plus 50 years for individuals, or a term of 75 years from the first publication or 100 years from creation (whichever expires first) for works made for hire by employees. Copyright rights commence upon the creation of the underlying
work, and registration is not absolutely required. Registration
of a copyright claim with the U.S. Copyright Office, however,
is a prerequisite for commencing an action for copyright
infringement. We strongly recommend that you consult regularly with an experienced licensing and merchandising attorney, or at least one with Intellectual Property experience. GCI will be happy to recommend firms that are knowledgeable about licensing and merchandising. Just contact us. NOTE: If you are doing business in countries other than the United States, your need for legal counsel with international experience is especially important.
How does a manufacturer go about identifying and securing rights for the next "hot" property? It seems that retailers care a lot about so-called "hot" licenses.It is not unusual for retailers to request "hot" licenses from their suppliers. And as a supplier, it is great when you have a so-called "hot" property or two. But, the reality of the business is that chasing only "hot" properties will in the long run "burn" you. It goes without saying that a manufacturer should develop a reputation with its retailers as being a dependable supplier that consistently offers innovative products at competitive prices. In other words, work on your product development and marketing plans first, and then look for licenses that will enhance your products. If the licenses become "hot," that is great, but our point is that you should not have to depend on "hot" properties to be successful in licensing. In baseball, winning teams do not depend solely on home runs. They play the game with all the tools at their disposal. The same is true in the licensing business. Nevertheless, in trying to find the next "hot" property, you will find no single answer to the question. The best advice we can give you is for you to educate yourself about licensing and make a serious commitment to the business. Think about developing some sort of suitable criteria that will assist you in evaluating the many licenses you will have to review. From our point of view, evaluation of licensing opportunities is one of the key reasons you should consider retaining the services of a consulting firm such as GCI.
What is the difference between a licensing agent and a consultant?The short answer is that a licensing agent typically represents the property owner. On the other hand, a consultant is usually associated with a manufacturer seeking and acquiring licenses. Some firms act as both agent and consultant. GCI represents manufacturers and also provides consulting services to the licensing community but we do not act as agents. However, we will help you find one if that is what you determine you need.
How are agents and consultants compensated?There is no hard and fast rule, but agents are typically compensated on the basis of a commission. Often an agent will ask for a retainer as well. Consultants operate in much the same way. GCI is a retainer-based firm charging a fixed monthly rate, or sometimes, a smaller monthly retainer combined with a commission. GCI also welcomes "project fees," which are usually one-time fees based on the length of time and amount of work the assignment requires.
What qualifications does a person need, and how can one go about looking for a job in licensing?While licensing has been around for a very long time in one form or another, it was not until the last twenty years or so that it has become recognized as a bona fide marketing tool. You are wise in thinking about a career in the business. It is an exciting, challenging, and ever changing business that needs bright, creative people. What is your background? Are you a salesperson, a marketing manager, an artist/graphic designer, an attorney, or what? The licensing business is like any other business and people with all kinds of backgrounds are needed. So regardless of your training, there is probably a job somewhere out there for you. Investigate the business thoroughly so that you can be somewhat knowledgeable and prepared for interviews. I would start my job search by obtaining licensing business directories from EPM (212) 941-0099, or LIMA (Licensing Industry Merchandisers Association) (212) 244-1962. In those directories, almost all companies in the licensing business are listed. They are broken down into a variety of categories. Also, you will find that licensees and licensors are located in all parts of the country, and in fact, the world. Get a copy of those directories and write letters, with a resume included, to those companies that interest you most, and see what kind of responses you get. In order to research the business and to prepare yourself for interviews, there is an introductory book that we would recommend that you examine. It is The Licensing Business Handbook also published by EPM. Meanwhile, here are some other tips. Read magazines, which cover the business such as The Licensing Book (212) 575-4510 and/or License Magazine (888) 527-7008. Both are published monthly. LIMA has several articles and much printed material about the business. LIMA also has audiotapes of seminars that cover a variety of licensing topics. If you are new to the business, we would suggest that you start with "Licensing 101" tapes from the past couple of years. LIMA will send you a list of available tapes if you call them. Lastly, from time to time, you will see classes on licensing and merchandising offered in university extension programs. UCLA and NYU have offered them for many years. An excellent way to get acquainted with the business is to attend the annual Licensing Show sponsored by Advanstar and LIMA, held each June in New York. The seminars are very good, and walking the floor will give you a great introduction into the business. |
| Links | home | Privacy
Policy Copyright © Gary Caplan, Inc. All Rights Reserved. |
 |