License To Profit

Who can obtain a licensing agreement? The list runs the gamut from a multinational conglomerate to a mom and pop company. But in general, a licensor looks for the strongest company in terms of finances, manufacturing and marketing. The good news for small business is that strength is not necessarily measured in dollars or longevity.

Consider New York City-based Apparel Dynamics Inc., a year-old firm that has snagged some fairly major licenses, including cartoon characters Rocky and Bullwinkle, The Big Comfy Couch and C-Bear and Jamal.

"Most people in apparel go by reputation, and we've been doing this for years," explains Robert Reda, vice president of merchandising and The collective experience of the company's key people, combined with the industry savvy of their licensing consultant, Cheryl Stoebenau, has helped open doors for Apparel Dynamics. When going after licenses, Reda says the company also flaunts its creativity. Furthermore, it stresses the advantage of working with a small firm--fewer licensed products means they can spend more time and energy on the ones they have.

Entrepreneurs who have less experience must rely on the quality of their product line and the strength of their proposal to attract a prospective licensor.

A unique product helped San Diego-based Fotoball U.S.A. get its foot in the door of sports licensing, says Carl Francis, the company's vice president of retail development. "CEO Michael Favish started the company on his living room floor [in 1986] by patching together a soccer ball [with photos of different soccer players on it] and presenting it to the licensing entity for World Cup Soccer," says Francis. "No one else in the market had anything like it. They loved the idea, and he got the license."

From there, Fotoball expanded into similar products for the National Football League, the National Hockey League, Major League Baseball and various colleges and universities.

Francis, who gave Fotoball its first baseball licensing contract while he was working in licensing for Major League Baseball, says there is still room for an entrepreneur to get a license with a major league sport. The key is finding a market niche and filling it with a unique product that has wide consumer appeal and will carve out new avenues of revenue for the licensor.

This article was originally published in the January 1997 print edition of Entrepreneur with the headline: License To Profit.