Get A Better Licensing Deal
My Proven Negotiation Strategies
My 65-Page Guide Will Tilt The Deal To Your Favor
After having negotiated dozens of best-in-class brand licensing agreements for both Fortune 500 and smaller companies, I can tell you this: A little preparation and some structure can go a long way toward a successful outcome.
Negotiating A License: Licensors Have The Upper Hand But Don’t Overreach
Because the licensor knows the prospective licensee wants to license their company’s brand, they inherently have the stronger position in the negotiation. As such, the licensor can and should use this knowledge to their advantage to ensure the brand is protected and shareholder value is maximized.
However, if the terms are so restrictive that they preclude the licensee from winning any business or handcuff the licensee from being able to gain a sustainable and growing revenue base once they do, the contract is doomed to failure. Similarly, if the terms are so expensive that the licensee cannot recover their investment and subsequently make a profit over the life of the contract, the license will fail before it ever gets off the ground.
Successful licensors keep the end in mind and practice win-win negotiating tactics. Similarly, smart licensees will have identified several choices of brands from which to acquire a license and will set limits on what deal terms they will accept, regardless of their brand preference. In these instances, both parties can shake hands on a set of terms they know will allow them both to be successful.
These terms consist of rights to territories, channels of distribution, covered products and trademarks, work product, quality assurance standards, the licensing approval process, manufacturing facility approval, royalty rates, minimum guaranteed royalties, and sales requirements. Understanding these terms and the commitments you will be making are crucial to an effective licensing contract negotiation and could save your company hundreds of thousands of dollars over the life of your agreement.