Use My Application Form To Vet the Best Potential Licensees

Smart brands use well-vetted forms to help them choose the best licensee for their brand. They ask a ton of questions because they want to maximize success and mitigate risk. Don’t get caught flat-footed. The more you know about licensee candidates the better you’ll get at selecting the right one.

The typical licensee application form tries to conduct due diligence from multiple perspectives: business, financial, legal and risk management. From the licensor’s perspective, the more comprehensive the form, the less likely it is that the licensee will have unforeseen issues going forward, and the greater the likelihood for success.

 

How To Qualify A Prospective Licensee

A comprehensive, thoughtfully-developed application form is critical for ensuring that prospective licensees have what it takes for the program to be successful.

I developed it when I worked as a brand licensing executive at Coca-Cola and Newell Rubbermaid and then continually refined it through my consulting work with other Fortune 500 brands. It’s an 11-page document filled with the kinds of questions brands are likely to ask.

Here’s an example of what kind of projections you should ask licensees for. It’s taken right out of my guide:
Projections Table

What you want to know about licensees

Picking the right licensee is imperative to a brand’s strategy. Whether they partner with a larger, more established licensee or go with a smaller one, determining the right fit requires asking the right questions.

Example Questions You Should Ask A Potential Licensee


First, brands need to know if potential licensees are a well-known, large outfit or a smaller, more regional business. For smaller licensees, the questions might include:

For larger licensees that may be more familiar to the brand, the questions are a little different:
Small or large, here are some of the questions you should be asking all licensees:

In my Knowledge Library, I have resource recommendations for five different brand profiles that will take your brand to the next level.

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How Brands Scrutinize Licensees

Entrepreneur Magazine asked me to identify six areas that brands are most concerned about. Here’s a shortened version of what I said. Though I’m speaking to licensors, the application to licensees is obvious–the more you know how a brand thinks the better your chances are of winning the business.

  1. Legal Check

    Is the company a legitimate legal entity? How long has it been in business? Where is it incorporated? Is it doing business under a different name? What is its structure? Is it a shell corporation, or does it have actual employees, assets, and liabilities? Has it been the subject of any major lawsuits in the last three to five years? If so, what was the nature of the charges and how did the company resolve them?

  2. Financial Check

    To fully understand the financial strength of an organization, it’s important to obtain the prospective licensee’s financial statements going back at least three years. These statements help assure the licensor (the brand owner) that the licensee (the manufacturer or service provider) has the resources to commit to the licensing program from the beginning to the end of the contract.

    Because many prospective licensees are privately held companies, they will be reluctant to share their financial statements. However, because it’s critical for a licensor to have this information, this should be a non-negotiable item. Licensors should also conduct a credit check. This reveals the prospective licensee’s timeliness and reliability to pay bills. Given the systematic royalty payment requirements of the licensing contract, ascertaining credit-worthiness is critical.

  1. Business Check

    Is the company reputable in the selected product category? Does it possess any other brand licenses or has it had them in the past? If so, what do current or previous licensors say about the way the company has managed its licensing programs? What is its reputation in the marketplace? What do current customers say about its reliability and serviceability? How well managed is the company? How eager is it to get the license? How collaborative? What are the estimated sales forecasts for the selected product, as well as its sales history, over the past three years?

  2. Marketing Check

    What is the prospective licensee’s market share position in the selected product category? How long has it been selling the product? What is its rank by revenue, distribution, employees? Is it a market leader? What channels is it presently in? How has it been growing? What kind of product innovations has it launched in the past? What are its strengths? How well does it understand the marketplace and branding? How is it currently promoting its products?

  3. Reference Check

    Reference checks are an important component of the due diligence process. Licensors should interview at least three buyers from among the retailers that the prospective licensee intends to sell the licensed product. This helps the licensor understand the quality of the company from a delivery, manufacturing, service, marketing, and sales perspective. In addition, licensors should interview up to three other licensors if the prospective licensee holds other licenses. These interviews enable the licensor to understand how effectively it can expect the candidate to execute a licensing program.

  4. Quality and Compliance Check

    Reference checks are an important component of the due diligence process. Licensors should interview at least three buyers from among the retailers that the prospective licensee intends to sell the licensed product. This helps the licensor understand the quality of the company from a delivery, manufacturing, service, marketing, and sales perspective. In addition, licensors should interview up to three other licensors if the prospective licensee holds other licenses. These interviews enable the licensor to understand how effectively it can expect the candidate to execute a licensing program.

30 Day Money Back Guarantee
$ 9 99

Save Money & Time

Not available in bookstores. You can only find it here.

Downloads as a pdf to computers, tablet and smartphones. Start reading IMMEDIATELY.


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