ADMINISTERIN

G THE
LICENSING
PROGRAM

Dr. Khor PH
 Learning Objectives
This chapter is designed to help you to:
 Identify the good practices in administration of a sports
licensing program
 List the factors of a successful sports licensing program
 Understand licensee selection.
 Describe the monitoring of licensee’s portfolio.
 Discuss the good practices in administration of a sports
licensing program.

 Identify the organization of

administrating a sports licensing
program.
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 Contents
1. Introduction
2. Good practices in administering a sports licensing
program
3. Factors of a successful sports licensing program
4. Licensee selection
5. Monitoring of a licensee’s portfolio
6. Organization in administrating a sports licensing program

7. Licensee’s report and analysis

8. Conclusions

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 Introduction

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Once the licensing agreement is in place, the
administration, organization, and reporting can
be implemented. However, administering the
licensing program is not an easy task.

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 Good practices in
administering a
sports licensing
program

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The following practices could assist in the administration
of licensing program:
1. The creation of the contract’s contents are integrated
throughout the organization.

2. Licensing agreements are standardized to extent

possible.
3. Licensee’s royalty reporting is
automated to facilitate Licensor’s
royalty management.

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4. Licensor has an ongoing royalty audit practice to
ensure integrity in licensing channels.

5. Control exists to ensure that IP are safeguard.

6. Licensor has used standard procedures in developing

licensee channels and selecting licensees to ensure IP
is protected.

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Factors Influencing
a Successful
Sports Licensing
Program

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 Powerful brand 1

• High brand awareness.

• Clearly defined brand equities.
• Devoted customer following.
• Proactive trademark management.

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 Corporate buy-in 2
• Endorsement from senior management.
• Commitment of an internal licensing champion.
• Responsive interaction with licensing agency.
• Allocation of required resources.
• Regular communication of marketing initiatives.

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 Proper program planning 3
• Well-defined licensing program goals.
• Timely approval of the Strategic Licensing Plan
(SLP).

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 Optimal partner selection 4
• Broad market research.
• Intensive due diligence.
• Prioritized selection criteria.
• Mutually beneficial license agreements.

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 Compelling sports product 5
• Reflective of the sports brand’s equities.
• Attractive price/value ratio.

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 Execution and management 6
• Proven processes, systems, and tools.
• Aggressive pursuit of infringers.
• Routine partner and program evaluation.

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 Licensee Selection

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 Monitoring of
Licensee’s Portfolio

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 1. What risk assessment procedures are
utilized around the licensing process and
portfolio of contracts?
2. What indicators are monitored to ensure
licensee is in compliance with contract
terms and conditions?
3. Have any licensed audits been performed?
4. What controls are in place to ensure the IP
are adequately protected?
5. Are black market channels monitored?

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 Important portfolio of a
sports agreement contract
Financial arrangement between the two
1 parties.
- Payments from the licensee to the
licensor usually take the form of
guaranteed minimum payments and
royalties on sales.
- Royalties rate depends on the specific
property involved and the licensee’s level
of experience and sophistication.

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 Time frame of the deal.
2 - Many licensors insist upon a strict market
release date for sports products licensed to
outside manufacturers.
- The licensing agreement will also include
provisions about the length of the contract,
renewal options, and termination
conditions.

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 Issue of quality.
3 - The Licensor may insert conditions in
the contract requiring the Licensee to
provide prototypes of the product and
occasional samples throughout the term
of the contract.

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 Which party maintains control of
4 copyrights, patents, or trademarks?
- Many contracts include a provision about
territorial rights, or who manages distribution
in various parts of the country or the world.
-Some Licensees may insist on a guarantee
that the Licensor owns the rights to the
property.

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Organization in
Administrating a
Sports Licensing
Program

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 Licensor Licensee
- Licensor grants licensee the
Provides access to license to use the IP in their
licensable assets, production.
besides - To ensure the quality of the
developing a style licensed products, Licensor will
guide. develop a style guideline for the
Licensee to follow.

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 Licensee Licensor
Approves licensed - Licensee agrees to cooperate
products, with licensor in facilitating
packaging, licensor’s control of the nature
marketing, and quality of sports products
and collateral sold in connection with the IP
materials for sales and to permit reasonable
and marketing. inspection of licensee’s products
to ensure compliance with the
guidelines set forth in the style
guide.

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 Licensee Licensor
- Licensee develops,
Develops, manufactures, and markets
manufactures, licensed sports products which
and markets conform to and are in
approved compliance and compatible with
products. the quality set forth in the style
guide provided by the Licensor.

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 Licensee and Licensor
- IP protection should be at the
heart of a licensee’s business
Monitors
strategy, no matter its size.
marketplace for
- Licensors should also broadcast
trademark
their rights wherever possible in
infringers.
promoting public knowledge of
their IP.

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 Licensor Licensee
- In the event that Licensee violates
or fails to comply with any
Termination of a provision of the agreement,
sports agreement Licensor will terminate the
contract. agreement upon a certain period (as
stated in the agreement) after
delivering written notice to the
Licensee.

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Licensee Reporting
And Analysis

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 Common Licensee
errors
1
Purposeful, otherwise unexplained
under-reporting of what is owing (i.e.,
the licensee lied).

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 2
A “misunderstanding” occurs
regarding what is covered by the IP
being licensed. New sports products
that should be royalty bearing are not
reported.

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 3
Sports product numbers get
altered. Those preparing the royalty
reports in a mechanical manner do
not report all products that are
royalty bearing.

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 4
Sub-license revenue is not
reported.

5
Royalty-bearing products are
bundled with non-royalty
products. Sometimes the bundle is
not reported at all.

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 6
Transactions are reported at prices or
terms that do not reflect market
conditions.

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Promotional uses, samples,
employee theft, and other
transactions that do not generate
revenue are not reported at all.

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 8
For international sales, incorrect
exchange rates are used.

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Unreported transactions occur at
international or subsidiary locations.

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 10
Differences in opinion exist regarding
terms contained in the licensing
agreement.

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On agreements that allow certain
costs to be deducted from the royalty
base, the Licensee uses unfair cost
allocations that lower the royalty
base.
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 Conclusions

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The success of any sports licensing program is
determined by the performance of the parties in their
respective roles with the needs and objectives of each
other. Licensor will continue to monitor and evaluating
the performance of his Licensees worldwide and their
strength and capabilities to appropriately represent their
IP.

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