Strategy Session: The Licensing Joint Venture

Licensing is often thought of as a single strategy, licensor to licensee. However, there are a number of other strategies such as brand-extension, co-licensing, cross licensing, joint ventures and strategic alliances, that can be used to make money with intellectual property. This month, we review the licensing joint venture.

 

A variety of intellectual properties such as patents, software codes, reports, trade secrets, or trademarks are developed through a joint venture licensing agreement. Some examples of how to use JV's include joint development of a new patented product from scratch, or to commercialize an intellectual property that is acquired by a license agreement.

 

In a joint development JV, intellectual property ownership must be clearly defined. For example, if both partners include IP, then the agreement should specify that each partner retains ownership of their preexisting intellectual property. If the IP is developed jointly, then it's important to specify how the IP will be allocated to each partner. When commercializing an acquired intellectual property, be sure to detail how the profits and costs for production, sales and distribution are divided.

 

Both large and small companies can use JV licensing. For smaller companies, a JV strategy is a good option to leverage each other's resources, such as manufacturing capabilities or distribution channels. If development capital is needed, a smaller company could form a JV with a larger company, and give them rights to future revenues, or to use the IP in different markets.

 

In the case of large companies, the partnering strategy focuses on co-marketing or cross - promoting each other's brands (or products). The goal of this partnering strategy is to acquire more customers or gain certain efficiencies, such as promotional costs. Examples include major airline alliances honoring each other's frequent flier programs, or fast food chains promoting the latest kids movie and offering a free toy with a meal purchase.

 

JV licensing is a flexible strategy that is used in many ways. It can be tailored to your specific needs, whether developing a new technology, acquiring rights to make and sell a product, or expanding your IP into foreign markets. 

Leveraging IP: Licensing a Team Sports Brand

Licensing a team brand provides access into a lucrative fan market, where the sport and team popularity can translate into significant product sales. Some of the biggest brands include the NFL, Major League Baseball, Basketball, Hockey, NASCAR and Colleges and Universities.

Team brands typically look for experienced companies that have a track record with their product, national distribution, sales reps and the documentation to verify their financial viability. They don't want you to use their property to get into business; they want you to be in business already. If you are a small company, you will also have to convince the licensor that you can handle any boom in sales that might occur with the license.

 

Most leagues have long-standing relationships in apparel and shoe categories with big licensees. But many other segments are wide open to small manufacturers. By keeping abreast of the licensors changing priorities, you can find new niches. For example, in the collegiate market, there are opportunities to license non-apparel products for some of the smaller colleges and universities. Sports licensors also like new innovative products that fit unfilled niches because they help keep their brand refreshed at retail.

 

Royalties for most team brands run 12% and higher. The specific percentage depends on variables such as the brand, market size (local or national) and product categories. Many leagues have a set royalty rate that is typically non-negotiable. All of them will require a minimum guarantee (expect five to six figures), and usually require an advance payment of 25% - 50% of that guarantee.

 

You can visit league websites to get information about their licensing requirements and application process. Although you can do the application process yourself, consider enlisting the help of a licensing consultant or other expert. They know the process and have relationships that can open doors much faster. If you are seeking rights to several team brands, a licensing expert will save you time and money.

 

Licensing a team brand can expand your business on a local, national or global scale, depending on the team and league. These licensors look for reliable licensing partners whose products enhance their image and reflect favorably on their team and brand.

  

 

A licensing plan provides the action steps for a successful licensing program. It is a marketing document that defines the products or services derived from the IP, what money making opportunities can be leveraged through licensing, and who are the right type of licensing partners.

 

During this webinar, you'll learn: 

• The 8 Critical Questions to Answer Before You Develop a Licensing Action Plan
• Identifying the Right Resources to Make Your IP Licensable
• Why Should I license this IP - Understanding the Licensee Benefits
• " Show Me the Money" Financial Forecast - Building a Quick IP Profitability Analysis
• The Fast Track Licensing Plan - Review of the Quick Start 3 Part Licensing Worksheet

At the completion of this webinar, you will have the knowledge, information and tools to quickly create a licensing action plan and the first step toward making money with your IP.

 

Click here to view the webinar. 

Free Special Report: Licensing Trade Secrets 
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Ask Rand Brenner