Licensing IP rights can be a great way to build a business, either by licensing out your existing IP to other product or service companies, or to expand or promote your products and services by exploiting the popularity of other’s IP (otherwise known as Licensing in).
This month, we’ll review the 3 key benefits of licensing out your IP:
Licensing Fees: Licensing out IP rights (such as brands, designs, artworks or technologies) to other companies can generate lucrative license fees and royalties. Some examples of licensing out include major consumer brands such as automotive (i.e. GM, Ford) and Beverage (i.e. Coke) companies, who license the rights to their brands for a variety of non-competitive product categories (apparel, toys, etc). Licensees of these brands typically pay royalties in the range of 5% – 10%.
Marketing Tool: Licensing increases the licensor’s brand exposure, and leads the IP into new markets. Sports franchises license the team logos into a variety of product categories, expanding their fan base reach through a variety of products such as t-shirts, hats, and collectible products.
Attract Sponsorships: Licensing can also be an effective tool to attract sponsorship for special events, as it strengthens the association between the sponsor’s brand and the event. Some examples include football matches, art exhibitions, music concerts, benefit dinners, and other type of events that license sponsors to manufacture and sell merchandise that bears the event’s trademark or symbol.