What Is A Product Licensing Agreement

If this is done correctly, consumers may never know that some of their favourite products were made by a third party, not by the brand on the label. And that`s the basis of any successful product licensing program. If done correctly, licensees reach new customers and diversify their revenue streams, while consumers have more opportunities to connect with their preferred brands. Licensing agreements are the conditions under which one party can use the property of another party. While the real estate concerned may include a variety of properties, including real estate and personal property, licensing agreements are most used for intellectual property, such as patents and trademarks, as well as copyrights for written material and visual arts. A licensing agreement is a legal contract between two parties, known as a licensee and licensee. In a typical licensing agreement, the donor grants the purchaser the right to manufacture and sell products, apply a brand name or trademark, or use the licensee`s patented technology. In return, the taker generally submits to a number of conditions relating to the use of the licensee`s property and undertakes to publicize the payments in the form of royalties. Other important players in the world of product licensing are media and gaming real estate, professional and collegiate sports teams, as well as food and beverage companies. The product license is probably responsible for your favorite sports jersey, your child`s toy line and the characters from your favorite video game. Everyone has their own reasons for using the product licensing business model, but all reach new customers and expand their product range beyond their internal capabilities.

The bargaining power of both parties to a licensing agreement often depends on the nature of the product. For example, a film studio that would grant the image of a popular superhero to an action figure maker could have considerable bargaining power in this negotiation, as the manufacturer will likely benefit from such an agreement. The film studio therefore has the lever to take its business elsewhere if the manufacturer has cold feet. If you continue with a licensing product contract, you may find that your business is growing rapidly. The question of where you apply for a licence depends in large part on this: licensing involves obtaining permission from a company (conedant) to manufacture and sell one or more of its products in a defined market area. The company that obtains these rights (the licensee) generally agrees to pay a fee to the original owner. Once the rights are guaranteed, the licensee manufactures a product using the ip granted and pays a fee in return to the donor for its use. This may be a flat fee or a percentage of the revenue of products that included the investigation period. This model can be applied to almost any product, from clothing and accessories to toys, household items and more.