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Royalties, Risk and Financial Know how Rafi Saville, Fisher Forensic
Content ,[object Object],[object Object],[object Object],[object Object],[object Object]
Introduction – what do we do? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
1. Net Sales Clause Key operating definition
Discounts ,[object Object],Promotion Discounts (e.g. Store Placement ) ,[object Object],Volume Discounts Bonus Rebates Early Settlement Discounts Trade Discounts Marketing Discounts (e.g Catalogues)
Pre-Invoice Discounts ,[object Object],[object Object],[object Object],[object Object],[object Object]
Other Deductions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Sales to Affiliates ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
2. Hide and Seek ,[object Object],[object Object],Hidden Clauses with significant financial implications
HC1: Sell off Period Provisions ,[object Object],£100,000 or £110,000? ,[object Object],Royalties During Term £50,000 Royalties During Sell-Off £10,000
HC2: Anti-Dumping Clause ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
HC3: Marketing Spend ,[object Object],Aim ,[object Object],Define Content ,[object Object],[object Object],[object Object]
HC4: Cross Collateralise MGs ,[object Object],Territories  Years Products or Product Categories
HC5: Restrictions on Sales ,[object Object],Sale or Return, Consignment Channels of Distribution Sales to specific customers Internet Sales
3. Common Misunderstandings ,[object Object],[object Object]
CM1: Point of Recoupment ,[object Object],[object Object]
CM2: Who Pays the Royalty? Licensee 1 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Licensee 2
CM2: Who Pays the Royalty? ,[object Object],[object Object],[object Object],Licensor Risk ,[object Object],Licensee Risk ,[object Object]
CM3: Royalty Escalations ,[object Object],[object Object],[object Object],[object Object]
CM4: Sales to Licensor ,[object Object],[object Object],Solution Make Reference to a Price List or Highest Price achieved Problem 1 ,[object Object],Problem 2 ,[object Object]
4. Calculating Royalties
Calculation: Responsible Person ,[object Object],[object Object],[object Object],[object Object]
Calculation: Multiple Statements  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Calculation: Transferring Information ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Calculation: Royalty Reporting Systems ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Calculation: Communication Risk: Royalty accountant may not be fully aware of contractual implications Dealmaker Lawyer Finance Director Royalty Accounts
Reporting ,[object Object],[object Object],Units, Values, Royalty Rate etc Territory Customers Invoice Level Support Stock Movements
5. Licensee Royalty Auditing
What is a Licensee Audit ,[object Object],[object Object],[object Object]
Why do an audit? Unreported Royalties Identify Breaches of agreement Protect the brand Find out how your Licensee operates Clarify misunderstandings early Deterrent to all Licensees Duty to shareholders Opportunity for Licensee
Do we usually find things? ,[object Object],Yes!
My Contact Details  ,[object Object],[object Object],[object Object],[object Object]

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Royalties Risk And Financial Know How 2009

  • 1. Royalties, Risk and Financial Know how Rafi Saville, Fisher Forensic
  • 2.
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  • 4. 1. Net Sales Clause Key operating definition
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  • 26. Calculation: Communication Risk: Royalty accountant may not be fully aware of contractual implications Dealmaker Lawyer Finance Director Royalty Accounts
  • 27.
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  • 30. Why do an audit? Unreported Royalties Identify Breaches of agreement Protect the brand Find out how your Licensee operates Clarify misunderstandings early Deterrent to all Licensees Duty to shareholders Opportunity for Licensee
  • 31.
  • 32.