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BRAND LICENSING
Licensed to thrill
It’s a growing industry with an annual global value of $191.7bn
and it can boost the value of your goods ten-fold. Licensing is an
attractive option for manufacturers, but you need to know what
you’re doing, says Sara McDonnell
W
hen it comes to branded goods, nothing of a license can be tricky. Also, contracts will place
works better than a well-known image or limitations and restrictions on the way a licensee
logo to make it sell in greater volume. But can use licensed material.
as we all know, you can’t just print any image onto As licensees are dealing with someone else’s
a T shirt; in fact the most well-known images are copyright, it’s only to be expected that the owner
protected by intellectual property laws making it will want to have a say in the way its image is used,
illegal to sell something with a licensed image such as colours, size, context etc. There is likely to be
without prior agreement by the brand’s owner. a style guide to follow, as well as limitations set on
This prior agreement is where brand licensing comes the territory to which the manufacturer can supply.
in, where deals can be struck between a brand Manufacturers may also be limited on the type of
owner and manufacturer of a product that uses the merchandise they can produce. For example, a
brand. company licensed to produce headwear will not
While licensing has been around for a long time, it
has become more visible in the last decade or so Jessica Blue
because of the kind of money it is now making –
$191.7bn globally at the last count (License Global,
2007). But what is it and how does it work? Read
on and find out…
How it works
A brand owner, or licensor, will have a brand it
wishes to extend through merchandising. It will sell
the right to print T shirts with that brand on, for
example, to a licensee who pays for the right to do
so. "Manufacturers pay a royalty to the licensor in
order to use their brand on their consumer goods,"
explains Jessica Blue, the director of Brand Licensing
Europe, the annual trade show dedicated to the
licensing industry. "These royalties will vary wildly
depending on what the license is and what they
want to use it on."
If all goes well and the licensee is able to sell lots of necessarily be able to produce T shirts unless
T shirts, it creates a win-win situation for both previously specified.
parties. The image or brand can turn into a huge You might say that these are all things that a
source of revenue for the brand owners (licensors) manufacturer would be used to dealing with on a
and manufacturers (licensees) alike. "The license day to day level when working with a client.
helps to increase revenues (for manufacturers)," However, there are many other factors to consider.
says Blue. "For example, a SpongeBob kids’ T shirt For example, a licensee will need to have a good
will sell better and at a higher price than a plain idea of how much they reckon they’ll be able to sell
white T shirt due to the character recognition and of a licensed product as, according to the LIMA
desirability of that character, offsetting the royalty website, most deals include a "guarantee" or
payments." "minimum" – a sum that the licensee is required to
The benefit to the licensor is twofold: not only does pay to the licensor even if little or no product is
it receive royalties from the licensee’s sales, the sold.
venture will have generated further awareness of This, of course, means there is an element of risk
their brand. involved. Links with retail are usually essential in
The potential sales for licensed merchandise, this respect; it’s all very well having a license to
especially that aimed at children, is huge. print say, Peppa Pig, on to thousands of bags, but
"Licensing for children (to age 14) in Great Britain without a means of taking the goods to the
was worth £2.2bn in 2007," says Blue. "Nearly £1 consumer it’s potentially a mountain of unsold
in every £5 spent on kids is licensed. That’s the stock.
equivalent of £188 spent on every child aged 0–14
per year or £4 per week." Picking the right brand
So far, so potentially lucrative. However, there are A successful license agreement for a manufacturer
many considerations to take into account if you’re a is also dependent on picking the right brand.
manufacturer looking at getting into licensing.
Licenses entail contracts, and determining the value
continued over
www.printwearandpromotion.co.uk September 2009 | 49 |
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