A Licensing Beginner? This is What You Should Avoid
5 common brand licensing mistakes to escape
Licensing was not overly popular in India until a few years ago. Penetration of technology and expanding global reach are the key parameters behind the mushrooming of this concept. With brands getting conscious about their social presence and consumer engagement, their will to not only to grow their core business, but also to create new licensing streams has increased.
Indian maturing market is witnessing vast growth in licensing and merchandising, simultaneously generating business, retail and consumer interest in international brands. Thanks to the entry of home-grown cricket tournament, Indian Premier League (IPL), sports merchandising has become caught up with the racing entertainment and fashion licensing market.
While Licensing is being widely accepted, it requires long-term vision and strategy. For India in particular, price-check is crucial. Quality control over third-party use of the licensed mark is another key aspect of licensing, the absence which can lead to dilution of the trademark uniqueness. Here are 5 common brand licensing mistakes you must avoid while adopting the model:
Lack of Contract Know-how
The first rule of signing any business documents is to read it from all angles, if not, disasters are in order. Negotiating licensing agreements is while a CFO’s job, it is crucial for the people who actually execute the program on a day-to-day basis, such as sales, marketing, product development, design, etc to be familiar with the contract terms and the licensor’s expectations to avoid overlooking obligations.
Licensing seems like a fancy business from the outside but has its own demons hiding under the carpet. Without the proper investment of time and efforts, the licensee cannot achieve the results they or the licensor anticipated when the agreement was made. The licensor expects the licensee to pursue every channel and every category designated to get desired returns with failure not being an option.
In order to meet contractual sales minimums or guaranteed royalty commitments, the licensee can be tempted to sell licensed product outside of their authorized channels or territory, indirectly putting the licensor at risk. To avoid such circumstances, licensing contracts come with stiff penalties warning the licensee of such means.
Depending solely on the brand license to run a business would be highly idiotic. Investment in product development is crucial but what is more relevant is for the licensees to understand that the brand whose license they have acquired alone on their product may not result in producing revenue. So, they need to keep their expectations in check.
Licensees often do not understand when signing an agreement that the licensor will expect them to custom design the attributes of the brand into their product and not just slap the trademarked logo to the licensee’s product. When these expectations aren’t met, the product often does not get approved and/or needs to be reworked and the licensee loses key sales opportunities.
If you are looking to explore the space more, India Licensing Expo 2019 is a perfect opportunity for you to do so. The serious business-to-business brand licensing show offers a galaxy of possibilities for your business growth and diversification. The expo is a true showcase of numerous licensing opportunities in diverse capacity, ready to be extended in multiple industries.
Register for the event here.
A business journalist looking to find happiness in the world of startups, investments, MSMEs and more. Officially started her career as a news reporter for News World India, Aastha had short stints with NDTV and NewsX. A true optimist seeking to make a difference, she is a comic junkie who'd rather watch a typical Bollywood masala than a Hollywood blockbuster.