Interested in brand licensing? In this video, I describe why you should consider brand licensing as an option to help your company grow and brands expand. If you are a manufacturer, I explain the benefits of brand licensing, and the process needed to get started. You can view the next video in this series here or on my YouTube channel.
Hi, my name is Hugh Simpson, and I was listening to Robert Alan–you remember him probably from Nothing Down, real estate fame–but he also wrote a book about multiple streams of income. And he was talking about what this gentleman next to me is going to be talking about – Pete Canalichio. Brand licensing. And Pete has an incredible background. He came from Coca-Cola, and from there, he went to the company that was Rubbermaid. What’s it called now, Pete?
A pleasure to have you here. It’s Newell Rubbermaid, now, huh?
Great to be here.
Great. Now tell me what brand licensing is.
Okay. Brand licensing is a technique that not too many folks know about, but it’s a tremendous way to get a brand into the marketplace, extend a brand into a category it isn’t in currently. So for example, Newell Rubbermaid has a Rubbermaid licensing program. Rubbermaid should be in a certain number of categories of products, but they can’t afford to do all of those products themselves. It’s just not practical. So what they do is they find third-party manufacturers who are best-in-class and the categories that they should be in, and they use that to supplement or complement what they’re currently doing in manufacturing. So let me give you an example. Now the Rubbermaid brand is all about storage and organization. Well, they help you organize your laundry room, your garage, and your closet. And in one particular case, in the closet example, they put a certain number of products that help you organize your life, but there’s other products manufactured by a third-party company and they complement what Newell Rubbermaid’s brand does. And the way that works is the third-party manufacturer gets the rights, they borrow the brand, they have to follow certain guidelines, but they manufacture the product. They pay Newell Rubbermaid a royalty, a percentage, of their net sales in exchange for that privilege. And of course, that helps that manufacturer get more business because now they’re coming to certain retailers with a Rubbermaid brand.
I believe that happened with Glock here right in Atlanta. Because you know they’re famous for their gun, of course, which everybody carries–police departments and military carry–but there’s also a Glock knife. And I figured that, and I read, I think, where they went to the biggest and best knife manufacturing operation, and then in turn, turned it into a Glock knife. So it has that world-famous Glock knife.
Now that’s a perfect example of a brand licensing relationship, and the thing about it is if you know what your brand’s position is–in other words, what’s it stand for–in the marketplace, then you can find other products that you should be in the marketplace providing. And why would you manufacture your own knife when there’s a best-in-class manufacturer out there who can put your brand attributes into their product, and then give you best-in-class distribution connection with your consumer, and complement what you’re currently doing in your core business and let you stay focused on your core business as that brand owner?
And boy the movie industry uses it, right?
Oh my gosh, yeah.
Toy Story would probably be a perfect example where they tie in with the movie and the toys and everything like that.
Exactly. Many movies, maybe many future feature films, are produced specifically for all the brand licensing that will occur afterwards. So it’s like, okay, let’s line up all the different categories of merchandise, and then create a feature film to launch that merchandise, you know.
Wow. I think that was what happened with GI Joe. GI Joe was out for many years, and then they finally created a GI Joe movie to compliment the toys.
It supercharges the brand; it gets it back out in the eye of the consumer. And then they create all kinds of new opportunities for manufacturers to connect with those consumers through the merchandise that’s featured in the film.
And I’ve actually worked with the NFL on a product and went to New York. And boy you talk about protecting their brand. The National Football League really protects them.
The NFL is one of the best examples of brand licensing. They have one of the biggest, if not the biggest brand, in the sports arena. And it is very lucrative, so if you have the opportunity to get a license with the NFL, you know you’ve kind of hit the pinnacle for sports manufactured licensing.
And we also look with our company. We were working with a guy that had to come up with a cool thing. Do you remember Dallas, the television show?
And it was the last episode about the swimming pool and “who killed JR?” or whatever, and we talked to them about licensing your product. And I was really amazed. It was not that much that they were asking that we would receive-I mean, we received a nice amount–but it wasn’t that much for us to get involved in licensing.
No, it really isn’t. Really there’s a couple of factors, but you know the first one is where are you going to go with your product. So what category, what retailers, what region? And then you come up with a kind of an overall estimate of what you’re going to sell, and then a very small percentage of that is provided to the brand owner up front. And then you agree a royalty rate, and for best-in-class brands that could be 10%, 12%, but for up-and-coming brands maybe it’s five or six percent. It’s not that much to give that manufacturer the chance to get out in the marketplace with a brand that everyone knows and loves.
Well, this was our first video promoting his package that’s coming out. It’s an incredible package here. An expert Robert Alan was saying that there were only two books that he had found written about brand licensing. Now we have Pete Canalichio, who has come from Coca-Cola and Newell Rubbermaid and has an incredible background. What will our next video be talking about?
The next video talks about where to play, what categories you should be extending your branding to, and then we talked a little bit about how to win. So should you be manufacturing, should you be sourcing that product, should you be acquiring another company, or should you be licensing it? That’s what we’ll cover.