Ten License Agreement Considerations

for licensing post

This post reprises a licensing program I did with Rand Brenner, President & CEO at Licensing Consulting Group. Rand assists clients in the acquisition and sales of licensing rights and is the author of Hidden Wealth: The Money Making Power of Licensing. Rand has developed and managed licenses with Universal Studios, Fox Interactive and Sony Pictures, among others.

At the program I discussed ten points parties to a license agreement should consider when negotiating. Here they are:

  1. The license agreement must be a win-win for both sides or it will not work.
  2. The more either party to the license does not need to do the deal the more leverage that party has when negotiating it.
  3. Quality matters. The licensor should have the right to approve the final product to ensure it is consistent with the licensed brand.
  4. Givers get; if your license grants exclusivity, you should receive a higher royalty.
  5. Before entering into a license each party should have an exit strategy.
  6. The duration of the license should allow the licensee a reasonable time to recoup its investment in the deal.
  7. Do your homework: find out the royalty other licensees are paying to license similar products under similar terms.
  8. Discuss money after agreeing on other issues such as geography, term, exclusivity and rights to be licensed; your agreement on these issues will help determine the royalty rate.
  9. Whether licensor or licensee, negotiate with respect to build trust.
  10. Take your time to ensure the license agreement creates a long-term, mutually-beneficial relationship.

Other suggestions? Please comment below or email me with them: aberger@leichtmanlaw.com.

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