What to Brief Your CEO Before You Sign a Brand Licensing Agreement

In this video, I talk about what questions you need to answer before you sign a brand licensing agreement and what should go into a memorandum to the CEO. This video illustrates Step 6 of my 8-Step Brand Licensing Process [Signing Your Dream Team – Segment 2]. You can view more of my videos on the Brand Licensing Process on my YouTube channel or on my videos page.

Transcript:

Hi, I’m Pete Canalichio, and welcome to the brand licensing pre-launch. You’ll recall in video number 5, Hugh Simpson and I talked about signing your dream team, and in the first part of this, I just talked about what is defined in the deal term summary. Once you have that deal term summary signed off by both the manufacturer and the brand owner, the next thing to do is actually get the contract signed. In some particular cases, though, if the contract size is of significance–in other words, it reaches a certain specific net present value level–there may be a requirement to send a memorandum to the chief executive officer about the particular contract and get his sign-off or her sign-off on what you’re actually anticipating entering into. When you do that, these particular deals require that the memo specifically calls out certain things, like can the licensee deliver reliable quality and service levels to the manufacturers and then ultimately to the retailers? And how will this particular license product help your brand? That’s very important, because if it’s not reinforcing the brand’s position, then at best it’s neutral, and it actually could be hurting the brand. The third thing that the memorandum should cover is does the financial return justify the brand owner’s time and total efforts? If that’s not the case, then you shouldn’t be entering into this agreement. So once those three questions are answered, and of course, preparing that memorandum will make sure that you’ve thought through all those particular components, then the contract is ready to be signed. And so the memorandum will be signed off by the chief executive officer, and then it’ll go through the old internal process, both by the manufacturer and by the brand owner. Then you come to the part where you’re actually sending executable copies to the licensee for them to sign off. Normally this can be five or six copies, because the licensor will typically want one for the business unit that’s negotiating the rights to the particular manufacturer, one to the licensing department, and one for the legal team. Then the manufacturer may have similar requirements. They may want one for their own legal team, whether that’s internal or external, and then they’ll probably want one for their business unit and potentially for the product development team or the marketing team that’s managing that particular category. So once you’ve accomplished this, you’ve actually signed your dream team’s particular key player on, and now you’re ready to get started with your licensing program.