Get All Access for $5/mo

How Landing a Brand Licensing Deal Can Boost Manufacturers A choice a brand licensing deal can quantum jump a manufacturer to the next level.

By Pete Canalichio Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

A sound licensing agreement is a boon for brand owners but, to work, a contractual arrangement has to be a win for both parties. A well conceived licensing contract has these benefits for manufacturers and service providers, also referred to as licensees.

Related: Why Licensing is the Best Way to Get Your Product on Store Shelves

1. Recognition. A T-shirt manufacturer with specialty printing capabilities can be selling generic T-shirts today and become an official Disney licensee of Mickey Mouse and Winnie the Pooh tomorrow. Instantaneous recognition is an immediate benefit for the licensee.

2. Enhanced authenticity and credibility. A video game manufacturer who develops an amazing soccer game has a nice product. If they can license the FIFA trademarks, they gain immediate legitimacy and authenticity for their game. Similarly, a maker of automotive parts or accessories will license specific car brands to establish in the consumer's mind that its products work seamlessly with the cars of the parent brand.

3. Reduced in-house costs. A manufacturer who acquires a major license often gains the licensor's preferred pricing on raw materials, shipping, creative, etc. In addition, they gain access to the licensor's style guide, which provides them with most of the imagery and artwork they need to design their products.

Related: A Surefire Way to Get a Licensing Agreement

4. New distribution channels. A manufacturer selling under a private label brand in mass merchandise outlets can license a more upscale line and gain entry to specialty and department stores uninterested in lower-end products.

5. Enter new regions. A door mat manufacturer in Germany selling its products in Europe can enter the US market by licensing a major household brand like Better Homes & Gardens.

6. Strategic knowledge. Licensees gain access to the licensor's expertise in marketing, supply chain management, customs or other subjects where they may be less proficient. Manufacturers can benefit from the licensor's databases and libraries for market research, manufacturing and product design. As true partners, licensor and licensee can identify and tap into each other's strengths.

For some licensees, acquiring one license opens the doors to more licenses. For others, gaining access to an important name brand can add immediate monetary value to their organization. Acquiring a license is an important consideration when owners are considering selling their company.

Acquiring a license from a world-class brand, if managed properly, can have a dramatically positive impact on a company that already possesses an outstanding product or service. The brand gives the manufacturer the credibility and recognition it needs to showcase its innovation and quality. One license can catapult an obscure company into a world of new customers and increased revenue.

Related: Licensing Your Invention vs. Going Into Business

Pete Canalichio

Managing Partner, BrandAlive

Pete Canalichio, the global authority on brand expansion, is on a mission to help brands become more alive in the hearts of those that experience them. He does that by helping them write a better story through compelling content, inspiring platform talks, in-depth consulting and workshops, and practical tools. Pete considers it a privilege to use his experience in global brand licensing and expansion at admired organizations such as Coca-Cola and Newell Rubbermaid to help his clients and their organizations reach their full potential.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business Solutions

Increase Productivity with This Microsoft 365 Subscription, Now $25 Off

It can make the entrepreneur life a lot easier.

Business News

Apple Pay Later Is Ending. Here's What's Taking Its Place.

The program was available for less than a year.

Leadership

This Artist Answered a Businessman's 'Powerful' Question — Then His Work Became 'the Poster Child for Juneteenth': 'Your Network Really Becomes Your Net Worth'

Reginald Adams was the executive director of a Houston-based art museum for more than a decade before he decided to launch his own public art and design firm.

Leadership

Harvard Business School Professor Says 65% of Startups Fail for One Reason. Here's How to Avoid It.

Team alignment isn't nice to have -- it's critical for running a successful business.

Business News

Here's What Companies Are Open and Closed on Juneteenth 2024

Since it became a holiday in 2021, Juneteenth has been recognized by some major corporations as a paid day off.

Growing a Business

I Hit $100 Million in Annual Revenue by Being More Transparent — Here Are the 3 Strategies That Helped Me Succeed

Three road-tested ways to be more transparent and build relationships that can transform your business — without leaving you feeling nightmarishly over-exposed.