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Negotiating Brand Licensing Deal Terms

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This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here:
http://flevy.com/browse/business-document/negotiating-brand-licensing-deal-terms-1602

DOCUMENT DESCRIPTION

This 50 page module will walk you through standard licensing deal terms that will be included in the contract. These terms include rights to territories, channels, covered products and trademarks, work product, quality assurance standards, the licensing approval process, manufacturing facility approval, royalty rates, minimum guaranteed royalties, sales requirements, etc. These are also guidelines that the licensee must comply with throughout the term of the agreement. This manual will ensure you know the deal terms and your contractual obligations before the agreement is signed.

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In using this document you are agreeing to these terms and conditions. This document may be used by the purchaser for his or her use only. You are authorized to use parts of the documents for reference but agree not to share or transfer the entire document. Additional copies require an additional purchase. Moreover, you may not use our products for any illegal or unauthorized purpose nor may you, in the use of the Service, violate any laws in your jurisdiction (including but not limited to copyright laws). This document may contain certain historical information. Historical information, necessarily, is not current and is provided for your reference only. We reserve the right to modify the contents of this document at any time, but we have no obligation to update any information in our document.

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Negotiating Brand Licensing Deal Terms

  1. 1. NEGOTIATING LICENSING DEAL TERMS 1© 2011 Licensing Brands, Inc. All Rights Reserved. A STANDARD LICENSING DEAL APPROVAL PROCESSS © 2009 Licensing Brands, Inc. All Rights Reserved. Brand Licensing Expert Pete Canalichio
  2. 2. NEGOTIATING LICENSING DEAL TERMS 4© 2011 Licensing Brands, Inc. All Rights Reserved. THE 5-STAGE LICENSING CONTRACT NEGOTIATION PROCESS /(*%4&)*)"7%&$(*1"*1&..*,&)7:))*%4"*&(%"5('.*-5$7"))*%4'%*.&7"()$5)*9$..$1*6"9$5"*)&#(&(#*'(*'#5""B +"(%*1&%4*'*.&7"()""2*E"*1&..*%'0"*>$:*%45$:#4*%4"*8'5&$:)*)%'#")*$9*,:"*,&.&#"(7"*'(,*%4"*%$$.)* '(,*,$7:+"(%)*:)",*%$*"('6."*.&7"()$5)*%$*%5'70*%4"*'#5""+"(%2**@5'(,*$1("5)*'(,*+'(:9'7%:5"5)* 14$*1&)4*%$*6:&.,*'*6")%B&(B7.'))*-5$#5'+*)4$:.,*9'+&.&'5&="*%4"+)".8")*1&%4*%4")"*,$7:+"(%)*'(,* %4"*-5$7"))2** Stage 1: Understanding the Deal Terms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mportant Deal Terms Brand/Trademarks Advance Covered Products Minimum Guarantees Authorized Channels New Product Introductions Territory Sales Performance Requirements Contract Term Shipping Date Exclusivity Commercialization Date Royalty Rate Sell-off Period This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  3. 3. NEGOTIATING LICENSING DEAL TERMS 7© 2011 Licensing Brands, Inc. All Rights Reserved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his document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  4. 4. NEGOTIATING LICENSING DEAL TERMS 10© 2011 Licensing Brands, Inc. All Rights Reserved. ,-))("26#867#36-$/H#3(*&)*%4"*,'%"*6>*14&74*%4"*.&7"()""*+:)%*4'8"*-.'7"+"(%*$9*%4"&5*Q&7"()",* 6:99"5*',,",*%$*%4"*-5$P"7%",*,'%"*%$*'..$1*9$5*7$(%&(#"(7&")2*3>-&7'..>*'*74'((".*&)*7$()&,"5",*%$* +'>*"A"57&)"*&%)*5&#4%*%$*5"+$8"*%4"*74'((".*95$+*%4"*7$(%5'7%2**/(*%4&)*&()%'(7"<*%4"*.&7"()$5*+'>* 74$$)"*%$*.&7"()"*%4"*5&#4%)*$9*%4"*74'((".*&(*C:")%&$(*%$*'($%4"5*+'(:9'7%:5"52* Stage II: Developing a Negotiating Strategy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his document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  5. 5. NEGOTIATING LICENSING DEAL TERMS 13© 2011 Licensing Brands, Inc. All Rights Reserved. !$1*%4'%*>$:*4'8"*'*#$$,*$8"58&"1*$9*%4"*V*"."+"(%)*$9*'*):77"))9:.*("#$%&'%&$(<*/*5"7$++"(,* %4'%*>$:*7$+-."%"*'*1$50)4""%*6"9$5"*"'74*("#$%&'%&$(*%4'%*1&..*."%*>$:*"8'.:'%"*"'74*$9*%4"*V*"."B +"(%)2**E"*4'8"*-5$8&,",*>$:*1&%4*'*%"+-.'%"*&(*;--"(,&A*/*%$*4".-*#"%*>$:*)%'5%",2 Standard Deal Term Ranges 14&."*"'74*.&7"()&(#*7$(%5'7%*1&..*8'5>*95$+*.&7"()$5*%$*.&7"()$5*'(,*95$+*7'%"#$5>*%$*7'%"#$5>*$9* ,"%"5+&("*14'%*1&..*6"*7$()&,"5",*'*):77"))9:.*("#$%&'%&$(2** $--$5%:(&%>*'(,*7$++&%+"(%*6>*%4"*.&7"()""*%$*&(8")%*&(*%4"*.&7"()"2 Royalty and Payment Terms %4"*7'%"#$5>*'%*%4"*%&+"*'(,*14'%*7$+-'5'6."*65'(,)*&(*%4"*7'%"#$5>*'5"*7$++'(,&(#2** B #&(*$(*.'-".*-&()*&)*+:74*4&#4"5*%4'(*%4"*+'5#&(*$(*%""*)4&5%)2*J$*'*.&7"()$5*7'(*%>-&7'..>*7$++'(,* Deal Terms Guidelines Technology 1% - 4% Corporate Brands 5% - 10% Pro Sports 12% - 20% Character 8% - 20% NCAA 8% - 12%Royalty Rates Sales Performance 25% - 40% of Forecasted Sales by Country, by Period Minimum Guarantees 25% - 40% of Forecasted Royalties by Country, by Period Contract Term 40% - 60% of First Year Minimum Guarantees Advances Commercialization Date Exclusivity 2 -3 Times Sales Performance and Minimum Guarantees This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  6. 6. NEGOTIATING LICENSING DEAL TERMS 16© 2011 Licensing Brands, Inc. All Rights Reserved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his document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  7. 7. NEGOTIATING LICENSING DEAL TERMS 19© 2011 Licensing Brands, Inc. All Rights Reserved. Well, we will be launching with 5 prod- ucts, so we can introduce 1 new prod- uct each year. Does that work for you? So, if we agree to launch 2 new prod- ucts a year, will you be able to meet your internal velocity rate? When you put it like that, it doesn’t seem as unachievable. Alright, we agree to $800,000 minimum sales in Year 1. Well, that depends on the concept approval by your team and the line reviews with the retailer. As I said, we need about 18 months to get product on shelf. $800,000 in minimum sales seems a little steep… That’s acceptable. What about new product introductions? How many new products do you plan to introduce each year? Normally, we look for a velocity of 40% for our internal products every 4 years, i.e., if we currently have 10 products on the market, we will launch 4 new products over that time period. Yes! I will include a minimum of 2 new products a year in the Deal Terms Sheet. Let’s discuss the sales performance requirements. We would like you to achieve minimum sales of $800,000 in Year 1. Good. Now when do you plan to ship the product to the stores and when will the product be available on the shelves? In other words, what are the shipping and commercialization dates you’re looking at? As per your forecast in the conservative business estimator, you projected selling $2 Million in Year 1. Even if you were to fall short of the target by 20%, you would have $1.6 Million in sales. All we’re asking is that you guarantee half of that number in sales. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  8. 8. NEGOTIATING LICENSING DEAL TERMS 22© 2011 Licensing Brands, Inc. All Rights Reserved. I understand and will contact my insurance provider. Sure, thank you Ms. Z, I look forward to working with you in the future! That’s correct. The cash advance will be offset against future royalty payments. We also require you to hold insurance with a minimum of $1 million coverage. We really don’t have much bandwidth here. Well, Mr. Doe, it looks like we have agreed to all deal terms. I will send you a copy of the Deal Terms Sheet for you to review and sign. That’s the going rate in the market for some of your direct competitors. I cannot argue with that! Yes, I think 7.25% is a fair rate. Okay. What are the minimum guaran- teed royalty payments in this case? And this will be paid at the time of signing the contract? I’m glad we agree. We also usually ask for 50% of the first year minimum guaranteed royalty pay- ments as a cash advance upon signing the contract. Well, we agreed upon the minimum sales target to be $800,000 in the first year. So the minimum guaran- teed royalty payments will have to be $58,022. Half of that amount, $29,011 will be the cash advance. Well, based on our analysis, if you sold $800,000 worth of product at a 40% margin and paid us 10% in royalty, we would earn $80,000 and you would earn $148,571. Now you said your margin won’t exceed 30%. At a 30% margin, if you paid us 7.25% as royalty, both of our earnings would fall by $21,978 each. We’re willing to share the burden of the lower margins with you, but we will not accept a royalty rate lower than 7.25%. Can you explain how you reached that number? This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  9. 9. NEGOTIATING LICENSING DEAL TERMS 25© 2011 Licensing Brands, Inc. All Rights Reserved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his document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  10. 10. NEGOTIATING LICENSING DEAL TERMS 28© 2011 Licensing Brands, Inc. All Rights Reserved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tage IV: Drafting the Agreement O(7"*)"(&$5*+'('#"+"(%*4'8"*#&8"(*%4"*,"'.*%4"*#5""(*.&#4%<*'(,*%4"*,"'.*%"5+)*4'8"*6""(*'#5"",* :-$(*'(,*)&#(",*$99*6"%1""(*%4"*.&7"()""*'(,*%4"*.&7"()$5<*%4"*.&7"()$5*')0)*%4"&5*."#'.*7$:()".*%$* ,5'9%*%4"*7$(%5'7%2*34"*,"'.*%"5+)*):++'5>*)4""%*-5$8&,")*%4"*+'%"5&'.*9$5*%4"*7$(%5'7%2* E4&."*%4"5"*'5"*+'(>*8"5)&$()*$9*.&7"()&(#*7$(%5'7%)<*6")%B&(B7.'))*7$(%5'7%)*7$(%'&(*%4"*9$..$1&(#* B* J74",:."*@*J7$-"*$9*Q&7"()" This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  11. 11. NEGOTIATING LICENSING DEAL TERMS 31© 2011 Licensing Brands, Inc. All Rights Reserved. Schedules D, E, and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tage V: Signing the Agreement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his document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  12. 12. NEGOTIATING LICENSING DEAL TERMS 34© 2011 Licensing Brands, Inc. All Rights Reserved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his document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  13. 13. NEGOTIATING LICENSING DEAL TERMS 37© 2011 Licensing Brands, Inc. All Rights Reserved. Initial Term: Extended Term (only upon mutual agreement of the parties): Insurance Requirements: Required limits may be satisfied by a combination of primary General Products, Umbrella, and/or Excess Liability insurance policies ROYALTY AND PAYMENT TERMS Royalty Rate: Advance: The Advance payment may be offset against Royalties due during the period that ends on ________________________________ Guaranteed Minimum Periodic Royalty Payments (by country and by period): Initial Term: Year AmountThis document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  14. 14. NEGOTIATING LICENSING DEAL TERMS 40© 2011 Licensing Brands, Inc. All Rights Reserved. APPENDIX III: INTERNAL DEAL MEMO (Can be used as a template) This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  15. 15. NEGOTIATING LICENSING DEAL TERMS 43© 2011 Licensing Brands, Inc. All Rights Reserved. APPENDIX V: Schedule C ROYALTY AND PAYMENT TERMS %4'%*7'."(,'5*>"'52**!$*,",:7%&$()*)4'..*6"*+',"*9$5*:(7$.."7%&6."*'77$:(%)2**!$*7$)%)*&(7:55",* &(*%4"*+'(:9'7%:5"<*)'."<*+'50"%&(#<*',8"5%&)&(#<*$5*,&)%5&6:%&$(*$9*%4"*Q&7"()",*N5$,:7%)*)4'..*6"* ,",:7%",*95$+*'(>*M$>'.%&")*-'&,*6>*Q&7"()""2* 34"*F=-9#839/=#3( 34"*F4%.#$2( B 34"*B1#"#$3((%/C6$6)1)/0("6-%62/=-9#839/0#9)($3+ ?"'5* * ;+$:(% * * * * ?"'5* * ;+$:(% PAYMENT INSTRUCTIONS Q&7"()""*)4'..*):6+&%*'..*-'>+"(%)*:(,"5*%4"*Q&7"()"*;#5""+"(%*%$*Q&7"()$5*6>*1&5"*%5'()9"5*&(* * * * !#$*K// / / / 422-1$3/D#)(K// / / / 4!4&=-136$G/SK/ / / / 422-1$3/SK/ * * * * This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  16. 16. NEGOTIATING LICENSING DEAL TERMS 46© 2011 Licensing Brands, Inc. All Rights Reserved. ?'I=4B;/?IJR':ID?/,#3(G-"9/?#8(+/U#$%/?3#$%#"%/C#"G6$X/ B $9*'%%"(%&$(*%$*%4&)*)"#+"(%2* @2*O5,"5*)&=")<*14&."*+$,"5'%"<*'5"*4&#4.>*8'5&'6." B %&$()4&-*1&%4*'*1"..B-$)&%&$(",*+'50"%*."',"52 * This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
  17. 17. © 2009 Licensing Brands, Inc. All Rights Reserved. LICENSING BRANDS, INC. IS A MEMBER OF THE EVERWORTH GROUP. This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/negotiating-brand-licensing-deal-terms-1602
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