about licensing

What is Licensing?

Licensing is the practice of leasing a legally protected property (such as a trademarked or copyrighted illustration, 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.

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 its own resources or capabilities

* generating new revenue streams

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