What is Licensing?

Licensing is the process of leasing a legally protected (trademarked or

copyrighted) entity – a name, likeness, logo, trademark, graphic design, slogan,
signature, character, etc. The entity, known as the property or intellectual
property, is then used in conjunction with a product.

The definition of Licensing aka The definition of Brand Licensing:

Licensing is the practice of leasing a legally protected property (such as a
trademarked or copyrighted name, logo, likeness, character, phrase or design) to
another party in conjunction with a product, service or promotion. It is based on a
contractual agreement between the owner of the property (or its agent) known as
the licensor; and a licensee – normally a manufacturer or retailer. It grants the
licensee permission to use the property subject to specific terms and conditions,
which may include the purpose of use, a defined territory and a defined time
period. In exchange for this usage, the licensor receives financial remuneration –
normally in the form of a guaranteed fee and/or royalty on a percentage of sales.
Most agreements are set out in a licensing agreement. We have licensing
agreement frameworks for sale. We would always recommend using a lawyer to
execute all legal documents, however being able to present your lawyers with a
basic framework of a licensing agreement, such as ours, with your key
commercial terms included, will help to reduce consultation time and costs at the
initial stages of the legal process.
The word ‘license’ can be spelled license or licence (licensing). Licence is
a noun and license is a verb. Before taking using a trademark, you apply for a
licence, but the licensor must license you to use it. In the USA they use “license”
as a noun.
The Licensing Process
We have devised a flowchart to demonstrate the processes involved in licensing:
 The Benefit of Licensing for Licensors
The key benefit for a licensor is the ability to exploit and enhance its brand or
property. Licensing can do this by:
 increasing its brand presence at retail or distribution outlet

 creating further brand awareness to support its core products or services

 supporting and enhancing its core values by associations with the

licensed products/service or category (e.g. association with a healthy food or
with a cutting edge mode of fashion)

 entering new markets (consumer or geographical) which were unfeasible

with it’s own resources or capabilities

 generating new revenue streams, often with little involvement or additional

financial or other resource implications

The Benefit of Licensing for Licensees

The key benefit for a licensee (especially manufacturer or retailer) is the ability to
significantly increase consumer interest in and sales of its products or services.
Licensing can do this by:
 transferring the values and consumer favour towards the property to the
licensed product or service

 providing added value and differentiation from competitive offerings

 providing additional marketing support or momentum from the core

property’s activity provided by the licensor

 appealing to new target markets who have not historically been interested
in a licensee’s product or service

 giving credibility for moving into new market sectors through product
extension

 gaining additional retail space and favour

 Brand licensing

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Licensing means renting or leasing of an intangible asset. It is a process of
creating and managing contracts between the owner of abrand and a company
or individual who wants to use the brand in association with a product, for an
agreed period of time, within an agreed territory. Licensing is used by brand
owners to extend a trademark or character onto products of a completely
different nature.[1]
Examples of intangible assets include a song ("Somewhere Over The Rainbow"),
a character (Donald Duck), a name (Michael Jordan), or a brand (The Ritz-
Carlton). An arrangement to license a brand requires a licensing agreement. A
licensing agreement authorizes a company which markets a product or service
(a licensee) to lease or rent a brand from a brand owner who operates a
licensing program (a licensor).[2]

 1History
 2Reasons for licensing
 3Global brand licensing industry
 4Brand licensing in India
 Brand licensing is a well-established business, both in the area
of patents and trademarks. Trademark licensing has a rich history in American
business, largely beginning with the rise of mass entertainment such as the
movies, comics and later television. Mickey Mouse's popularity in the 1930s and
1940s resulted in an explosion of toys, books, and consumer products with the
lovable rodent's likeness on them, none of which were manufactured by the Walt
Disney Company.

This process accelerated as movies and later television became a staple of

American business. The rise of brand licensing did not begin until much later,
when corporations found that consumers would actually pay money for products
with the logos of their favorite brands on them. McDonald's play food, Burger
King T-shirts and even ghastly Good HumorHalloween costumes became
commonplace. Brand extensions later made the brand licensing marketplace
much more lucrative, as companies realized they could make real dollars renting
out their equity to manufacturers. Instead of spending untold millions to create a
new brand, companies were willing to pay a royalty on net sales of their products
torent the product of an established brand name. Armor All auto
vacuums, Breyers yogurt, TGI Friday's frozen appetizers, and Lucite nail polish
are only a handful of the products carrying well-known brand names which are
made under license by companies unrelated to the companies who own the
brand.

Reasons for licensing

A company may choose to license its brand(s) when they believe there is strong
consumer acceptance for brand extensions or products. For example,
when Apple launched the iPod there was an immediate need for accessories
such as headphones, charging and syncing stations and carrying cases. Apple
decided not to manufacture these products and instead chose to have
a licensee make the products. By doing so, Apple could offer branded "Earbud
Headphones", "iPod docking stations" and "iPod socks." Each is made by a
separate company but together offer the consumer an elegant solution. All of
these accessories are sold by licensees.
Apart from benefits to licensors, there are benefits to licensees as well.
Licensees lease the rights to a brand for incorporation into their merchandise,
but do not share ownership in it. Having access to major national and global
brands, and the logos and trademarks associated with those brands, gives the
licensee significant benefits. The most important of these is the marketing power
the brand brings to the licensee’s products. When brand managers enter or
extend into new product categories via licensing they create an opportunity for a
licensee to grow their company. Below is an example of the licensed product
process steps:

 Licensor chooses the product categories to be licensed

 Licensor finds and negotiates a license with the best licensees
 Licensees develop concepts, prototypes and final production samples and
submit for approval
 Licensor approves licensed products for sale
 Licensees sell licensed products to authorized retailers [3]

Licensees expect that the license will provide them with sales growth. This sales
growth may be in the form of growth within existing market or the opportunity to
enter a new market. To achieve this, licensees expect that the brand they are
licensing has significant brand preference, that it will open doors and ultimately
help them meet or exceed their business objectives. The licensing contract
forces the licensee to achieve certain sales targets and royalties; therefore, the
goal of the licensee is to quickly meet their business objectives, thereby
achieving their contract obligations. Royalties are the monies paid to a licensor
by the licensee for the right to use the licensed property. It is calculated by
multiplying the Royalty Rate by the Net Sales.[4]

Global brand licensing industr

The main international professional association for brand licensing is
the Licensing Industry Merchandiser's Association, which sponsors the
annual Licensing International Expo.
The Society of Product Licensors Committed to Excellence (SPLiCE) is a
Licensors Community of Practice with the vision to continuously improve brand
licensing. The mission of SPLiCE is to act as a community of licensors who
share best practices for protecting, promoting and enhancing brand integrity. The
SPLiCE Licensors Workshop acts as its annual board of directors and members'
meeting. During SPLiCE Licensors Workshop, benchmark findings and industry
trends are highlighted in feature panel presentations that are relevant to the
community at large. They engage a creativity philosophy of divergence and
convergence to sustain unique idea implementation on best practices. The vision
for SPLiCE Licensors Workshop is to provide best in practice licensing education
through sharing educational best practices through benchmarking initiatives, task
force collaborations, committee reports, and guest industry speakers
Each May, License! Global magazine publishes an annual list of "The Top 150
Global Licensors". For 2013, the leader was Disney Consumer Products with
$39.3 billion in retail sales of licensed merchandise, followed by Iconix Brand
Group and PVH.[5]

Brand licensing in India

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 The liberalisation of the Indian economy in 1992 brought a slew of international
brands to India. Many of these brands have been licensed to Indian
companies. Arvind Brandsrepresent Wrangler, Arrow, Nautica, Jansport and
Kipling. The Murjani Group is the licensee for Calvin Klein Jeans, FCUK and
Tommy Hilfiger. Beverly Hills Polo Club (BHPC) is licensed to Spencers Retail.
Character Licensing is another big licensing segment of brand licensing in India.
The big players in the character licensing industry in India are Walt
Disney, Viacom and Cartoon Network Enterprises. Characters licensed out by
Walt Disney include Mickey Mouse and Donald Duck. Viacom has brought in
popular characters from Nickelodeon like Dora The Explorer and SpongeBob
SquarePants.

Brand licensing in Italy

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Brand Licensing in Italy started in the seventies with very few Licensing
Agencies. Apart from Disney which had its own dedicated office in the market, all
the other big Entertainment majors were represented by independent agencies.
One of these companies named DIC 2 (Distribution International Characters),
founded in 1973 by Mr. Gianfranco Mari contributed to create the licensing
business in Italy and set big phenomena as He-Man and the Master of the
Universe, Marvel Comics, Star Wars, Hanna &
Barbera characters, Zorro, Asterix and so on. DIC 2 is still one of the biggest
independent agencies in Italy, representing different cartoon characters and
famous brands.
Licensing Objectives –
I. Preventing Crime and Disorder
II. Securing Public Safety
III. Preventing Public Nuisance
IV. Protecting and Improving Public Health
V. Protecting Children from Harm
Preventing Crime and Disorder
It is the responsibility of the premises manager or any trained responsible person
in relation to relevant premises to ensure that crime or public disorder is not
endorsed on their licensed premises. It is the duty of the premises manager to
ensure measures are in place to help prevent any criminal act or public disorder.
Securing Public Safety
It is the responsibility of the premises manager and any trained responsible
person in relation to relevant premises to ensure that all areas both inside and
outside of the premises are safe for public use. It is the duty of the premises
manager to ensure health & safety risk assessments are carried out in respect to
relevant premises.
Preventing Public Nuisance
It is the responsibility of the premises manager and any trained responsible
person in relation to relevant premises to ensure any form of nuisance arising
from the premises is deterred or dealt with, such as noise nuisance, smells or
bad odours, anti social behavior or any form of nuisance arising from the relevant
premises.
Protecting and Improving Public Health
It is the responsibility of the premises manager and any trained responsible
person in relation to relevant premises to ensure that relevant premises pose no
threat to public health in any way, and measures are in place to improve and
protect the health of the general public that use relevant licensed premises. In
particular to areas outside of the premises still classed as relevant to those
premises with regard to smoking areas and children’s play areas etc.
Protecting Children from Harm
It is the responsibility of the premises manager and any trained responsible
person in relation to relevant premises to ensure that all children are protected
from harm on licensed premises. and the sale of alcohol and other age restricted
products are not carried out. Also to ensure children are not allowed on relevant
licensed premises unsuitable for their use.