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May 26, 2023

BRAND LICENSING LAW: Legal Tips for Expanding Your Impact

BRAND LICENSING LAW:  Legal Tips for Expanding Your Impact

Licensing your brand to a third-party for expansion can be an effective strategy to grow your business and extend your brand's reach. However, it’s crucial to negotiate key provisions in the licensing agreement to protect your brand integrity and maximize your returns.

Brand usage guidelines:

Clearly define how the licensee can use your brand, including approved logos, trademarks, and other brand elements. Specify the usage, restrictions and guidelines to ensure a consistent representation of your brand across all license products or marks.

Territory and Duration:

Determine the specific geographic territories where the licensee can operate and sell products or services using your brand defined the duration of the license agreement, including renewal options to maintain control over your expansion plans

Quality control:

Establish stringent quality control measures to maintain the standards associated with your brand.  Specify requirements for product or service quality, packaging, marketing materials, and customer service to protect your reputation and ensure consistency

Royalty Structure:

Negotiate a fair and mutually beneficial royalty structure that determines how the licensee will compensate you for using your brand. Consider a percentage of sales, fixed fees, or a combination of both, depending on the nature of the business and the marketplace.

Minimum Sales Targets:

Include provisions that outline minimum sales targets that the licensee must achieve within specified time frames. This ensures the licensees commitment to promoting and expanding your company while also motivating them to commit to marketing and distribution efforts.

Exclusivity and Competition:

Consider whether you want to grant exclusive rights to the licensee within a specific industry or territory. Define any competitive restrictions, noncompete, clauses, or limitations on the licenses ability to work with your competitors.

Marketing & Promotion:

Outline the licensee's obligations regarding marketing and promotional activities. Specified the required marketing budget, advertising channels and promotional strategies that the licensee must employ to enhance brand visibility and drive sales.

Reporting and Auditing:

Require the licensee to provide regular reports on sales, marketing activities, and financial performance. Retain the right to conduct audits to ensure accurate reporting and compliance with the terms of the agreement.

Intellectual Property Proprty (IP) Protection:

Clearly define the ownership and protection of the intellectual property associated with your company. Include provisions that safeguard your trademarks, copyrights, patents, and all other proprietary rights and specify how any infringements will be handled.

Termination and Dispute Resolution:

Establish provisions for terminating your agreement, including breach of contract, non-performance, or other contingencies. Additionally, outlined a clear dispute, resolution mechanism, such as arbitration or mediation that may include confidentiality to protect your brand and address any conflicts that may arise.

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