What is a Brand Licensing Agreement?

Pete Canalichio gives examples of brand licensing, defines what it means to license a brand and articulates who the role players are in a licensing agreement. You can view more of Pete’s videos here or on his YouTube channel.

Transcript:

Hi, I’m Pete Canalichio. Welcome to the brand licensing pre-launch. You may recall in the first video, Hugh Simpson and I talked a little bit about the first webinar entitled “The Brand Licensing Guidebook.”

Today, I’m gonna talk a little bit about that and specifically go over what a brand licensing agreement is and who are the role players. So when we talk about a brand licensing agreement, first off, it’s good to know that an agreement authorizes a manufacturer to lease or rent a brand from a brand owner in exchange for the rights to use that brand on a particular product. So let’s give an example. Think back to the early 1990s when Nike made an agreement with Michael Jordan to create the Air Jordan sneaker. In that particular instance, Nike was the manufacturer or the licensee who was borrowing or leasing the rights from Michael Jordan to put his name and likeness on the Air Jordan shoe. And so Michael Jordan was the brand owner, and so he in this particular case was the the person giving away his intellectual property in exchange for royalty, and Nike was getting the benefit of using Michael’s name, likeness, and persona on their shoe. And of course we all know that that shoe was one of the most successful ever launched in the in the world of athletic attire.

So that’s a good example of what a brand licensing agreement is, now let’s talk a little bit about who the role players are. So I just gave you an example where Nike was the manufacturer. Now let’s jump to it and and let’s flip it and say in this case, Nike is the brand owner. So they are the owner, they own the swoosh, and they own all of the brand attributes that are associated with that swoosh. So if you’re thinking about Nike, and they’re going to create a whole line of athletic apparel, then there would be a manufacturer who’s creating that apparel who would lease, license, or rent that brand–the Nike swoosh–from Nike in exchange for the rights to put that swoosh on their merchandise. So that company, that manufacturer, is called the licensee. The licensee then speaks to a series of retailers–and those retailers can be athletic stores, department stores, even mass merchants–and that licensee, the manufacturer, arranges an agreement with the retailer to buy the Nike branded merchandise. So the third player in this equation is the retailer. And then after the merchandise is put on shelf, in the retailer stores, of course, the last part, and the most critical part of the equation is the consumer. And the consumer comes in, sees the Nike branded merchandise, sees all the qualities and attributes that are put into that product by the manufacturer–the licensee–of course in the retailer’s location, and then they choose to buy. And when that happens, you have the whole licensing arrangement completed, and you have excellence in the marketplace where the consumer is buying the branded merchandise that was allowed to be created by the licensor, who is Nike, to the manufacturer. And so that’s a good idea of how the brand licensing process works. Thank you.