Associating your company with an established IP has many benefits, including potential for expanded market exposure and increased sales.
Are you ready? And more importantly, do you need it?
The licensing industry is an intricate beast. Half science, half art. It can be intimidating, but honestly it can also be one of the most fun aspects of product development.
Before you enter the world of licensing, ask yourself the following:
Would my product benefit from a license association? It is tempting to want to put a recognizable character on your product- but is it necessary? If you are say, a hat company - Would having a STAR WARS logo on your hat increase sales? Probably yes. Say you are a coffee company. Would a Star Wars logo help your bag of beans? Probably not (In fact long term it might hurt it - more on that below)
Want to jump right into a licensing deal with Disney or Pokemon? Of course you do. Everyone does. But as a first time licensee this is nearly impossible. Most “A” level licenses will want to see at least 2 years of a successful relationship with other licensors before considering your proposal.
Is the license you want already represented in the sector you are in? Let’s say you are in the stationary field and want to have Pikachu on your notebooks. Look around - Are there already Pikachu notebooks? Generally speaking if a licensing category is spoken for, they wont grant another similar company the license.
Do you have the funds? Licensors will want a financial guarantee, partially up front. They will also want to verify that you have working funds to create the product line you propose, over the course of the license (generally 2-3 years) If you don’t have a healthy operating fund, maybe hold off until the coffers are more filled.
Can the market support your product price plus the added price of the licensing royalty? Per the coffee analogy above - Let’s say your 1 lb bag of coffee beans is a the market high end price of $17.99 per bag. Adding a license will take $2 royals from each bag. How do you make up that difference? Can your coffee hold a $19.99 retail? If you stay at $17.99 with the quality suffer with 2 less dollars you can put into the product? All real considerations.
Are you ready to switch manufacturing facilities, or pay to have your factory made compliant, if they don’t pass licensor audit?
The above are only a few of the things you want to think about before entering a licensing relationship. It can be very hard to navigate, which is why some companies hire liaisons (like me!) to do the introductions and negotiations. However, often times the financial rewards outweigh the stressors - which is why the licensing world exists in the first place. Do you need help making these decisions? Feel free to reach out to me for a consultation.
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