Brand Licensing

Anyone here have experience in brand licensing? I’m wondering about typical brand licensing costs, agreements, etc.? Of course I do realize that it depends on what brand you would be licensing (ie. I’m sure a Disney license would be a bit more than Bob’s Gun Shoppe), but just looking for some general benchmark costs, typical agreement terms, etc.

this is what i got with a bit of googling. anyone have anything to add?

In general throughout the licensing industry, licensees pay the licensor a percentage of the wholesale cost of the item, somewhere between 4 percent and 12 percent. In addition, the licensee typically pays a marketing and/or advance fee to secure the license. Royalties are paid quarterly based on sales. Licensees are expected to achieve guaranteed royalty payments. Each license is negotiated separately.

R

Percentages sound about right. Typically the licensee pays an upfront based on a guaranteed royalty. This is negotiable, of course. The terms would include length of license (including sell off period- possibly), specifics of brands/properties involved (i.e. a Nick license might only give the licensee rights to develop for Dora only, not Spongebob, etc) and categories (i.e. toasters, eye patches, tape guns, etc).

If you want to get into more specifics PM me.

R’

I just finished a three hour meeting at my home with a man that I am going to partner up with and he has a wealth of knowledge with College licensing.

He took a start up to $5,000,000.00 first year last year in this very arena so I think he can give you some insight.

One thing I do know is that the only common thing with licensing is that nothing is common.

Take for instance college licensing, some schools of a conference belong to a group and the others are on a solo program. Some want money up front for projected sales and some have a standard scale.

I will be more than happy to introduce you to my guy through email and you guys can go from there. He and I are in the most romantic part of our relationship so assisting you won’t be an issue on his part I don’t think.

Let me know if help here doesn’t work out for you.

r2

hey cover me via PM, i got a new product type I am womping out and building brand is part of the score.

R
I have never seen two licensing agreements that was exactly the same. It all comes down to the art of negotiation, getting both sides to common and mutually benefitial terms. Most licensing agreements have expiration or renewal terms, when everything is up for negotiation again. Looking beyond the financials, agreements need to include oversight to protect brand from damage.
To get to a Brand license cost, you must first get to a Brand value. Here is one Brand License Valuation model: http://www.goldmarks.net/pdf/how_much_for_the_brand_license.pdf
Legal advice may also be beneficial.

The contracts vary massively. I work about 80% of my time with licenses.

If we are talking footwear, AFAIK the likes of Disney and Mattel take the biggest percentages, can be more than the mentioned 12% Often the license agreement is for a four year term. The license can be incredibly specific - a client of mine has license for a specific tv character and only for rainboots! It can stipulate the price point, the type of retail outlet you can sell to, there can even be a limit imposed on the pairage you can sell (I’m serious!)

Over a decade ago a UK retailer lost the rghts to produce Caterpillar clothing under license,the license was for workwear, but they really bent the rules (since when was a pink denim minidress workwear?) and lost the license.

If it’s a new footwear license, sometimes you can negotiate a contract where the % royalties changes according to your turnover.

I worked on a skechers license 10 years ago - we had to use a certain percentage of our turnover on advertising, I think thats quite unusual, though.

You will have to pay a fee upfront, then the royalties. Some licenses I work on require me to attend a designers forum with other licenses designers. Often theres a style guide to follow, with the colours you must use and the trends you must design to, some licenses do not produce a style guide, others allow you to change and adapt but with their approval.

The biggest difficulty with licenses is pleasing the licensee and the licensor at the same time.

I’m thinking especially of GBMI and Diesel Jeans (I don’t have anything to do with either of these BTW)

It can be complicated.

thanks for the replies, all. pretty much confirmed what i expected.

R