Brand licensing is the agreement through which the owner of a brand or character (the licensor) lets another company (the licensee) use it on products or services the licensor doesn’t make, in exchange for a percentage of sales called a royalty. The licensor extends the brand’s reach without opening new factories; the licensee sells a product the public already recognizes. In between there is often a licensing agency, which builds the program, finds the right companies and makes sure every product respects the brand.
Who does what in a licensing program
- Licensor. Owns the rights to the brand, character or work. Decides which product categories and countries to license in, and approves every product before it reaches stores.
- Licensee. The company that designs, makes and distributes the licensed product: a food, toy or apparel company, a publisher. It pays the royalties and, almost always, a minimum guarantee.
- Licensing agency. Works for the licensor (sometimes for the licensee): it sets the strategy, proposes the categories, searches for and selects the companies, negotiates the agreements, prepares the style guide and follows the approvals.
How it works, step by step
- Strategy. You work out what the brand means to its audience and where it can credibly go. A heritage candy brand and a cartoon character open different doors.
- Categories and territories. You choose the product categories (food, toys, apparel, home, publishing, events) and the countries, with or without exclusivity.
- Finding licensees. You look for companies with the right products, distribution and financial strength, and present the brand and the project to them.
- Contract. You set royalties, minimum guarantee, term, sales channels, approval rules and reporting. The legal side must be written with a lawyer.
- Style guide. The licensor (or the agency) delivers a guide with artwork, logos, colors and usage rules, so every product is recognizable and consistent.
- Approvals. Every product goes through the licensor at several stages: concept, prototype, production sample, packaging.
- Launch and monitoring. The product reaches the market, and the licensee sends sales reports and pays royalties on the agreed dates.
Licensing, franchising and merchandising: the differences
In franchising you grant a whole business model (sign, store format, suppliers, procedures): a franchisee replicates the franchisor’s business. In licensing you grant only the use of the brand or character on a product, and the licensee stays free to run its own company. Merchandising, in everyday language, means branded items (T-shirts, gadgets, mugs): a licensee often makes them, so they are one of the things licensing makes possible. Co-branding, instead, is an alliance between two equal brands that sign a product together.
Which brands can be licensed
Not just famous characters. Our licensing portfolio includes cartoon and anime characters such as Lupin III, Go Nagai, Holly & Benji and Calimero, food brands such as Pastiglie Leone, Ferrero and Chiquita, sports and media brands such as Gazzetta, San Siro and Calciatori Panini, and icons such as FIAT 500 and Vespa. It works for a brand that has a loyal audience, clear values and a registration covering the categories it wants to enter. A lesser-known brand can still do licensing, but it usually starts with a few categories close to its own product.
How big the market is
According to Licensing International’s Global Licensing Industry Study 2026, worldwide retail sales of licensed merchandise and services reached $389.8 billion in 2025, up 5.45% from 2024 (Licensing Italia). In Italy, MLD Entertainment’s Osservatorio Licensing estimates that licensee companies grew from 780 in 2007 to roughly 1,950 in 2025 (Affaritaliani).
How long it takes
It depends on the category. Between signing the contract and the product reaching the shelf come design, approvals, production and getting listed by distributors, who often work on seasonal calendars. That’s why a licensing program is planned over several years, not as a single campaign.
Guides to every step
- Licensor and licensee: who does what
- How to license your own brand
- How to choose a property to license
- Royalties and minimum guarantees
- Licensing agreement: what to decide before signing
- Licensing style guide
- What a licensing agency does
- Brand extension
- Licensed merchandise
- Character and anime licensing
- Sports licensing
- Licensing glossary
Where to start
If you have a brand or a character and want to find out whether it can be licensed, the first step is an honest check: what it means to the public, how it is registered, and in which categories it would make sense. The steps one by one are in the guide on how to license your own brand; if instead you are a manufacturer looking for a character, read how character and anime licensing works. In the next article we explain how royalties and minimum guarantees work, the question that always comes up at the first meeting. The technical terms are collected in the licensing glossary.
