|
Licensing Agreement
components: - Royalty
Rates: Make sure that the royalties are based on
the wholesale price and not the retail price. It
should also spell out what the royalties will be if
items are returned, disconts are given or bad debts are
incurred when an item is purchased. -
Advances: Advances are usually a part of the
arrangement between the Licensee and the Licnesor where
the Licensee make advance payment to the Licensor as a
guarantee that they will sell a certain minimum amount
of the item. It is not refundable. It is a
percentage of the projected sales that the Licensee is
paying up front to the Licensor. -
Guarantees: The guarantees are the sums of money
that the Licensee will pay the Licensor at the end of
the contract minus the advances. It too is based
on the overall projected sales for the entire period of
the contract. Specific payment dates could be
established for those payments to be made. So if
the total projected sales is $100,000 and the royalty
rate is 10% then $10,000 is the total payment you can
expect. Some of that will be paid upfront as part
the Advance and the rest will become guarantee payments
to be made by the end of the contract.
- Territory: The territory is where (or what
countries or parts of a country) the Licensee will have
the right to sell distribute and sell your product.
Licensees would prefer to have the right to distribute
and sell in all territories. If you want your
products to be sold overseas to a broader market you may
want to grant this right to your Licensee.
- Exclusivity: Exclusivity means granting a
Licensee the right to sell your product in a specific
area or in a certain way in a specific area exclusively.
That is, no one else will be allowed to sell the same
product in that area or sell the product in a certain
way in that area. For example, if you license your
logo to a Licensee to be sold only on T-shirts in
Alabama it means that no one else will be able to sell
T-Shirts with your logo in Alabama, but others may be
license to sell it on coffee cups, calendars, etc in
that same area or somewhere else. -
Distribution: This is granting the Licensee the
right to only offer to sell your products to certain
stores. If you have certain brand name stores that
you think would present a good image and be the right
fit for your product you may elect to limit the
Licensee's distribution to those stores only.
However, this may make your product less attractive to
the Licensee. - Duration: This
stiuplates how long the contract will run for. The
time frame is usually 2-5 years. However, you can
stiuplate that the contract be terminated under certain
circumstances, such as if target sales goals are not
being met.
Sample Licensing Agreement - Invention City
Sample Licensing Agreement - Invent Spot
Sample Licensing Agreement
|
