This document provides an overview of licensing, merchandising, and franchising as ways to exploit intellectual property (IP) assets. Licensing involves granting permission to use IP in exchange for fees and can be exclusive, non-exclusive, or sole. Merchandising allows use of brands and characters to promote sales. Franchising provides permission to use a proven business system. These arrangements generate revenue, recoup expenses, and expand markets without large investments. Close monitoring and management of licensed IP is important.

2. Exploiting IP AssetsExploiting IP Assets
Overview ofOverview of
Licensing,Licensing,
Franchising &Franchising &
MerchandisingMerchandising

3. RoadmapRoadmap
An overview of Licensing, Merchandising &
Franchising
Benefits of these arrangements
Licensing
Nature
Types
Key elements of a license agreement
Merchandising
Franchising
An overview of the Franchise Act 1998
Conclusion

4. An Overview

5. Licensing, Merchandising & Franchising
LicensingLicensing
Permission to use IPR to improve profitability &
expand opportunities, subject to contractually
agreed terms & conditions
MerchandisingMerchandising
Permission to use of brands/characters/events to
promote sale
FranchisingFranchising
Permission to use “proven business system”
(standard products/services, look & feel, signage,
methods of preparation, inventory control) to
replicate success

6. Why, Oh Why?Why, Oh Why?
Show me the Money – Generate revenue$
Recoup R&D expenses & investment
Vehicle for entry into:
 new geographic markets without major capital investment
 new product markets or product range
Form strategic alliance
 build relationship
 create new opportunities
 gain know how (new applications of old technology)
Strengthen market position
Incorporation of technology into industry standard

7. Licensing

8. Nature of LicensingNature of Licensing
IP owner retains ownership
A tool to leverage & exploit IP rights
Entering a new business
Expanding an existing business (extending
territory or nature of business)
Improving quality of goods/services
Improving market positioning
Settling legal suits

9. Exclusive, non-exclusive, sole
License
Exclusive
Sole
Non-exclusive
Only the licensee
Owner and Licensee
Owner and
various licensees
Sub-License

10. TypesTypes
Licensing Out
 Grant right to 3rd
Parties to use IPR
Contract manufacturing
Distributorship/Dealership/Agency/Marketing
Expansion into new market, product range, brand, technology
Licensing In
 Use 3rd
Parties’ IPR
Technology transfer
Settlement of legal suits
Cross Licensing
 Exchanging of rights to use IPR
Co-branding
Collaboration, joint R&D , joint development
Co-existence

11. Stages of negotiations, execution &
management
Negotiations
NDA, confidentiality agreement
Heads of Agreement/MOU/LOI
Due Diligence
Execution, Implementation &
Management
Termination & Post termination

12. Key Elements of a License Agreement
 Parties
 Definitions
 Grant of Rights
 Extent & Scope of licensed rights
 Right to sub-license
 Field of Use
 Territory
 Term & Renewal
 Payable fees
 Lump Sum
 Royalty
 Payment terms
 Overdue payment
 Taxes
 Parties’ other rights & obligations
 KPI
 Quality control
 Confidentiality
 Accounts, records & audit
 Ownership & Enforcement of IPR
 Improvements
 Representations, Warranties &
Indemnities
 Termination
 Consequences of Termination
 Miscellaneous provisions
 Entire agreement
 Compliance with laws
 Severability
 Notice
 Governing laws and dispute forum

13. Merchandising

15. MerchandisingMerchandising
Improve visibility and appeal
Licensing out
 Revenue generation (royalties, license fees)
 Expansion into new market, extending product range and
business
 Invaluable marketing tool
 Risk free (relatively) and cost effective
Licensing in
 Increase brand visibility & recognition
 Reduce brand awareness cost
 Shape or reinforce perception
 Revenue generation (more sales)
Brand extension

16. Merchandising
Character PersonalityEvent
Source:
http://www.etawau.com/HTML/AirAsia/Lat.htm

17. Brand extension
Source: http://www.virgin.com/about-us/

19. Franchising

20. FranchiseFranchise
Efficiencies, economies of scale, market
penetration, increased sales and
profitability
"Franchising means working for yourself,
but not by yourself"

21. Foundation of Franchising
A method of growing a business where a franchisee
is granted, for a fee, the right to distribute goods or
provide services under a system determined by the
franchisor
3 critical components of franchising
Intellectual Property Rights (IPR)Intellectual Property Rights (IPR)
Include trade marks, confidentialInclude trade marks, confidential
information, copyrighted manuals, tradeinformation, copyrighted manuals, trade
dress (décor) and all intangible assets thatdress (décor) and all intangible assets that
create customer loyaltycreate customer loyalty
Operating system
Delivers the promise of proven business format
Ongoing support
Tools and tips to expand growth of customer
base and market share

22. Ingredients of a franchiseIngredients of a franchise
 For a business arrangement to be considered a franchise under
the FA, all of the following elements must be present:
 a right to operate business according to franchise system;
 a grant of license to use the intellectual property rights such as
the brand names, confidential information and copyright;
 a continuous control over business operations in accordance with
franchise system;
 assistance rendered to operate business (e.g. provision or supply
of materials and services, training, marketing, and business or
technical assistance);
 in return, there will be payment of fees or other form of
consideration; and
 the business is operated separately.

23. Common elements
Protected IPR
Core brand identity
Shared connection or theme
Control over commercial use
Identified scope of license
Putting a value to the IPR

24. Conclusion

25. Take-Aways
IP Assets are business tools
Its use should not be limited internally or simply to
exclude others
Many different ways to leverage, exploit, maximize &
monetize your IP
Managing expectations
 clear communication to establish mutual trust and respect
 exercise sensitivity to relationships
After the deal has been struck, important to monitor
and review for compliance
 Licensing management and enforcement
Development of strategies to manage, monitor and enforce
Compliance programs and audits
A need to continuously fine tune the license agreement

26. Thank youThank you
Email :avikekeservices@gmail.com
Tel : +254727363338
Copyrights & Trade Marks of third parties in this presentation
belong to the respective owners and are used solely for a non-
commercial purpose