Licensing is glorious. It boosts revenue without creating more work and can help expand your brand’s reach.
So what’s the catch? Well, like anything there are rules and risks so don’t just go creating a licensing program all willy nilly before getting clear on what you’re doing. Read below for some basic information on licensing and, as always, this is all stuff that we specialize in, so if you need help just wave that white flag and we’ll come save you.
What is licensing?
Licensing is a way for businesses to increase revenue and expand the reach of their creative work, without increasing workload and infrastructure. In practical terms, “licensing” describes a situation in which a business wants to rent (ie, license) its intellectual property to another company for a limited use, and often, a limited time frame. The licensor (the licensing business) retains ownership over its intellectual property, while the licensee (the business who received the license) uses that intellectual property. This use is for an agreed upon purpose to generate revenue, and toss (a pretty solid amount of) that money back to the licensor.
How can I use licensing to achieve my goals?
Licensing is a stellar way to achieve revenue goals without over-burdening your business or needing to drastically expand your operations. A successful licensing program will also expand the reach of your brand, and/or product or service, beyond what your organization alone might be currently capable of. This increase in revenue and brand recognition can help fund other endeavors and create demand for more products and services under your brand. All good things, right?
How do I start a licensing program?
Before you strike out in search of eager licensees, you MUST bulletproof your brand. This process will not only protect your valuable assets during the negotiating process with potential licensees, but it will also force you to identify any holes or areas for improvement within your current product/service offering. The two most common steps to start with are:
- Secure any necessary trademarks and copyrights to protect the material you plan to license,
- Draft a non-disclosure agreement to use with potential licensees.
Here’s more details on the basic steps to starting your licensing program.
What do I need for a licensing program?
So in order to license, your intellectual property’s gotta be protected by trademark and/or copyright. You’ll also need a licensee whom you trust will live up to your brand/product standards, and a solid licensing agreement. By “intellectual property” we mean any content you have created (e-books, worksheets, videos, courses, etc) or your brand/business name itself. Of course, it goes without saying that in order to be of interest to potential licensees, your intellectual property probably needs to be pretty bangin’.
Is licensing risky?
As long as you have a solid licensing agreement and you trust that your licensees will maintain the quality of your brand name and other intellectual property (something that you will commit them to in the licensing agreement, btw), licensing isn’t really more risky than most other business endeavors. The crucial part of keeping your risk low is having a thorough and intelligently-drafted licensing agreement, enforcing quality standards, and maintaining a relationship with your licensees. When beginning negotiations, you should also have all potential licensees sign a nondisclosure agreement (AKA an “I promise not to tell your secrets”).
Does licensing work for services?
Yes! If you’ve developed a strong brand and have a solid method, platform, etc. for delivering services (i.e., coaching), licensing is a great option. In this scenario, you’d typically license your content (training materials, worksheets, e-books) along with your brand name, so that others can provide the same service you provide, with your material, under your brand name, to a greater audience than you may currently have the capacity to reach.
What do I put in a licensing agreement?
The importance of a solid licensing agreement cannot be understated. We mean it! Licensing agreements are definitely one of those that you’ll want to have drafted by an experienced lawyer. Typical licensing agreements at the very least include provisions on: the scope of the intellectual property rights to be licensed; geographical and other market restrictions; rules about sublicenses; amount, type and term of royalty payments; exclusivity of the license; non-disparagement and termination.
What kind of stuff can I license?
Intellectual property licensing refers to the licensing of the parts of your business that are protected by trademark and or copyright (or should be protected by copyright and trademark). In other words, your brand/business name, and any original content you’ve created. Regarding trademark, potential licensees could use your trademark to produce goods and services that you aren’t already producing, or to bring your existing goods and services into new markets. Potential licensees could also expand the market for your literary or artistic endeavors (the content you create) by licensing the copyright in them.
Wait. Someone wants to use my trademark?
Well, licensing is a good option for allowing someone to use your trademark, while maintaining its protection. A trademark licensee can use your mark—along with all of its goodwill—to create additional goods and services or to bring your existing goods and services into new markets. In these such arrangements you must actively ensure that your trademark is not being abused or diluted, and to ensure that customers aren’t deceived.
What are the different kinds of licensing (resale, re-print, master license)?
There are several different types of content licenses depending on the intellectual property at issue. Generally speaking, a resale license is where the licensee is allowed to reproduce and sell the product to third parties and pay royalties to the licensor. A reprint license is pretty self explanatory: it generally allows the licensee to reprint the licensor’s copyright protected material with some payments made back to the licensor. Master license is the general term that refers to the main licensing agreement in a situation where there are one or more sublicenses.
How does a license protect my business/brand?
Really it’s the licensing agreement and your attentiveness to the licensee’s use of your trademark that will protect your brand. Also, the time you take to vet potential licensees goes quite a ways to protecting your brand as well.
What limits can you put on a license?
Licenses can be for a limited duration (i.e., one year or 5 years), a limited territory (i.e., only in the U.S.) or limited in scope (the licensor may only reprint certain content for certain purposes, etc). You can also prevent your licensee from sublicensing. Limiting your licenses is another way to maintain control over your brand. Basically, there are a lot of ways and you’re the boss.