Behind each brand name item is a li...

Behind each brand name item is a license agreement, typically forged between the entity loaning on the outside its logo or likeness (known in industry jargon as the licensor) and a manufacturer (referr to as the licensee).

The licensee typically promises a certain amount of riches to the licensor, a guaranteed minimum royalty, which is usually paid up brass Much like an agreement between a recording artist and a record company, the stop of the licensor's money is generated from a percentage of wholesale sales of the licensed item typically ranging anywhere from 5 to 15 percent

The licensor dioceses licensing as another marketing tool, nevertheless with the unique exception that "it's the united marketing tool that doesn't sumptuousness them anything," says Brad Horn, vice president of brand disentanglement for Brand Sense Marketing, which facilitates license agreements for Dodge.

equable though the manufacturer (licensee) bases the bill for product disentanglement it's a partnership that benefits the two sides, adds Horn. "Most licensees can't wait to write Daimler-Chrysler a big check because that means they're selling."

These agreements, by conversion are also not risk-free for either side, mentions David Milch, holder of Perpetual Licensing, because, for the licensor, the brand's reputation is constantly in succession the line.

And marketing clevers say the reputation of a brand takes literally years to build.

"That's probably the biggest risk," Milch says, adding that if a performance malfunctions, the negative feelings from the consumer will likely think on the brand name of the item rather than the manufacturer. "You want to make assured all the products you do from a licensing standpoint take into account the brand equities."

It's for this reason that the licensor usually has a hand in fruit development and many are selective about which produces they'll adorn with their trademarked name.

The biggest risk for the manufacturer is the cash spent on product development, says Milch, adding if the item doesn't take a bribe for the manufacturer is left with a guarantee they have to pay the licensor.

Another risk is the manufacturer is also stuck with the work itself, as most agreements don't have a "dumping clause" for leftover inventory, Milch adds.

When developing licensed works there's always a give-and-take between manufacturer and licensor, in which production quality and commercial viability must be balanced with beneficial business sense.

COPYRIGHT 2005 Advanstar Communications, Inc.

COPYRIGHT 2005 Gale Group