Getting your first licensee is one of the most challenging steps in the licensing process. Sometimes a company approaches you about licensing your IP. Most often, though, it starts with marketing your licensing opportunity to potential licensees.
One of the best ways to do that is with a sweetheart deal. The strategy is simple – you offer your first partner a license at little or no cost upfront.
Since you’ve got a lot riding on the success of your first licensee, it’s wise for you to put in a lot of time and help in getting your licensing partner started. The reason is once you have the first licensee on board, you can use that licensee as a reference for other licensees interested in licensing your IP.
I consulted with a client who created a new nightclub event brand to attract new customers. They contacted me when a nightclub approached them about licensing their brand. We negotiated the first license using the sweat heart deal with no upfront money in return for the nightclub promoting the brand and the event. The result was a big hit and lots of publicity. That kick-started their licensing program, and it attracted several large nightclub operators who wanted to license their event brand for multiple locations.
When searching for your first licensing partner, consider companies close to you geographically. That way, you can meet in person, and it’s easier to work with them directly. You can search for partners in trade journals, online trade association directories, and trade shows. Referrals and networking are also some of the best resources for finding partners. So don’t limit yourself. Today’s video conferencing services, such as Skype, make it much easier to work with licensing partners in other parts of the world.
Whether your IP is a product, service, brand, or technology if you are looking for a fast way to get your first licensing partner, use the sweetheart deal strategy. That doesn’t mean they are not a paying partner; it means no upfront costs, and they pay you royalties on sales. It’s a win-win for everyone.