If you’re thinking about licensing an idea, just know that it comes with its own language. For example:
Licensing: leasing a trademarked or copyrighted brand identity, including brand name, tagline, logo, slogan or any other form of brand signature, to another business, usually for use on a product or product line.
Licensor: the owner in this case is you, if you do it.
Licensee: the business or person renting the rights to use the brand registered.
Contractual agreement: this is the legal document of permission that defines how the licensee may use the brand and how the licensor will be paid.
The contract should include specific usage purposes, limitations on applications, geographic area, time period, payment schedule, and terms. Rely on an attorney to draw up and review the agreement, and obtain formal signatures. Handshakes are great, but only after the ink is dry.
Royalty: a percentage of the licensees who sale revenue (offer near at or 5%), well this is how we handle it at the agency. Which is paid to the licensor in exchange for the rights to use the brand. In most contracts, the licensee agrees to pay the owner of the brand a guaranteed minimum royalty payment plus a royalty on all sales that exceed the minimum payment amount.
In a good licensing an idea agreement, both parties benefit. The licensor gains the benefit if a brand extension and related market place presence and sales revenue (via royalties) without any investment in product development, production, or marketing. To the brand owner and licensor, licensing is a no-cost form of brand value leverage.
The licensee gains the benefit of the licensor’s brand name, which lends immediate awareness, distinction and trust to the manufacturer’s product rollout. Without the need for any brand development investment, the licensor is able to achieve marketplace dominance and command a premium sales price thanks to the lease of the licensor’s brand name.
Licensing an idea should not be scary, however it’s the small letters and assumptions that makes it a scaring process.