How to Pick Best-in-Class Licensees

Pete Canalichio takes you through the process of determining how to pick licensees and ensure they are fully qualified to become a part of your company’s brand licensing program. You can view the next video in this series here or on his YouTube channel.

Transcript:

Hi, this is Hugh Simpson back with Pete Canalichio, formerly of Coca-Cola and Newell Rubbermaid. Pete, we talked about in the last video about third party partners, and we were talking about vetting them. Now let’s say, go back to our closet example, okay, so we now have maybe two or three people that we’re considering right now. We move to what process?

Now we move to the scoping, the opportunity, part of the process. So what you’re going to do with this phase is, you know, who those prospective licensees or manufacturing partners are. You’re going to send them a kind of a template where you’re going to ask them to define what regions they want to be in and make sure that those regions complement where the brand is, what channels in those regions. So is this in the mass channel, is it in the department store channel, is it online, is it on television? These are what channels and then what products are actually going to create over a particular period of time. So they are going to come back to you, and they’re going to give you a bottom up forecast of what they’re going to do, how they’re going to be investing in your brand. And so as the brand owner, you want to make sure that you’re commercializing the brand in that category as much as possible. So now you’re going to be able to see if the number one manufacturer is potentially going to do a large investment, are they thinking of a more of a smaller investment? And you think about those prospective manufacturing partners. They have their own reasons for choosing to take a license. Also maybe they’re saying to themselves, “if I don’t take the license with a particular brand, somebody else will.” And so that’ll be a competitive threat. So what do I need to do to earn the license? Somebody else might say, “wow, this is a huge opportunity for us. We have innovative products, but we don’t have a brand they can get into.” What I call one of those pitfalls, which is really getting in over there, tips, in other words. They may say, “wow, in order for us to win this, we have to make it big and attractive.” But as a good brand owner, you need to be able to look at the forecast they’ve sent to you and say, “okay, is this really realistic? Are they going to be able to get into those channels?” And the way we define a commercialization of a channel is you have to be in two of the top five manufacturers within two years. Well, if you’ve done your homework as a brand owner, you’ll know these guys are only in one channel with really a couple of products. Can they really get into all those other channels? So one side is looking at what the prospective manufacturer is saying they’re going to do; the other side is really evaluating, determining if they can actually accomplish what they’re saying they’re gonna do.

When I did my events with Coca-Cola–and everybody thinks I should go to Coca-Cola National, you go to Coca-Cola Bottling–so when I did it with Atlanta Coca-Cola Bottling, they would ask me, “where’s that banner going up here? How many television spots?” So you’re gonna have it on this kind of thing of where are we gonna be? Where’s our name gonna be? How’s it gonna be used? This is what you’re talking about.

Exactly. You know they say the devil’s in the details. They really want to know, okay, what are those products you’re thinking of manufacturing? So give us mock-up examples of what’s your plan, where are they gonna go into first? Okay you are in, let’s say Target. So you’re going to go to Target first because you have a relationship there. You’re gonna see Target, and after you got Target commercialized, then you’re gonna go and try to get into Walmart for example. So that’s the mass channel. In the department store channel side, you’re gonna say, okay look, you have a relationship with JCPenney, okay. So you’re gonna get into JCPenney first, and then to commercialize that channel, you’re gonna go into Sears next. So it all makes sense, and you know the onus is on the brand owner to be able to look at those forecasts and be able to vet them and make sure that what you’re hearing is actually correct.

So that’s what you did for Newell Rubbermaid. You vet those third-party partners to make sure that they had the quality that Rubbermaid–as you said earlier–you could peel off the name on there, and you know was Rubbermaid quality.

Yes, exactly, that’s what we did. That’s what I did. I found those partners in the categories that we were deciding, where we want to enter the market via licensing, and then I vetted them to make sure that they were going to be able to do everything they said they were going to do. And then I evaluated their forecast, and then once that’s done, we’ll get into the next video which is really about defining the deal terms and getting the contract signed.

Oh boy is that important. Well, tune in to that video for sure.