Benefits of Brand Licensing
The commercialisation of your brand through licensing, can help maximise the potential of your trade marks, and is key to generating business revenue and increasing commercial value.
If you are considering making an approach to a potential licensee/licensor and exploring the possibility of a licensing deal, or are just curious about licensing, you might like to know more about the benefits of brand licensing before heading down this commercialisation route.
There are a number of good reasons to consider granting or taking a brand licence:
1. Commercial revenue stream
By licensing your brand or taking a licence, you will be creating a revenue stream or an additional revenue stream (depending on how many users/ licensees there are), which could help your business to increase its commercial value and also provide funds for reinvestment in your core business.
Depending on the nature of your current trade mark portfolio and your business plans, you may be wanting to license your core brand only, or other trade mark branding elements (e.g. sub-brands, logos). However, you may also want to consider the possibility of licensing those trade mark registrations which are no longer of interest, if these exist. Rather than abandoning such assets, you could maintain both the ownership and validity of these marks and also create a valuable revenue stream through licensing.
2. Utilising the capabilities of the other party
Working with a licensor or licensee, who has in place established manufacturing and/or distributing facilities and expertise, could enable you to benefit from these capabilities. This could speed up your route to market and save you the time and costs involved in setting up e.g. a manufacturing site.
There could also be cost savings and efficiencies to be made by both licensor and licensee by sharing common costs such as promotional and advertising activities.
3. Entering new markets/distribution channels
Where a licensor or licensee is manufacturing goods or providing services in a different market or through different distribution channels, licensing provides an opportunity to gain entry to a new market and reach different and/or new consumers. This could expand the interest and appeal of your brand to new market segments.
4. Increased brand awareness
Licensing will help increase the use and visibility of your brand name and raise consumer awareness in relation to the products/services offered under your brand. Depending on the networks and distribution streams of a licensor or licensee, this could mean reaching new types of consumers and geographical locations.
Licensed goods and services could mean more advertising for your brand (possibly in those markets and for those consumers you have not yet targeted) and also help build brand reputation and recognition.
Licensing enables the possibility of different types of strategic partnerships such as co-branding – where both parties are licensing their brand to each other, with the aim for these brands to be used together.
Co-branding can help both parties to increase their brand recognition and reputation. Any co-branding agreement needs to be thought through carefully (e.g. are the brands a good fit) and drafted to ensure that both parties are aware of their responsibilities to ensure no issues occur e.g. damage to brand reputation. We suggest conducting due diligence before entering into a co-branding agreement.
7. Infringers and Competitors
Convincing an infringer to obtain a licence to use your brand name (if appropriate), could help you avoid having to taken infringement action against them and ultimately prevent possible reputational damage to your brand and the dilution of your trade mark.
While it may seem unusual to suggest that you could allow a competitor to take a licence to your brand name, this may be a good strategic move where you would prefer to prevent them from entering the market with e.g. a new product line, or under their own brand name.
Brand Licensing benefits summary
Licensing your brand will allow you to retain control over your trade marks, whilst creating a revenue stream and opening up the possibility of entry to new markets. Also, partnering up with a licensor or licensee with manufacturing and distributing facilities and/or marketing and sales expertise, will enable you to enter markets at a quicker pace and save you the time and costs involved in developing these resources.
There is also the benefit of raising consumer awareness and exposure to your brand by having a licensed product supply stream, and possibly introducing your brand to new consumers in the marketplace.
In part 2 – we will cover brand licensing pre-negotiation considerations and tips before entering licence negotiations with another party.
If you would like any further information on licensing and/or if you have any questions on trade marks, designs or copyright, please contact…
This article is for information purposes only and not to be taken as legal advice.