The licensor owns the rights to a brand, character or work and grants their use; the licensee is the company that receives the licence, makes and sells the products and pays royalties. The licensor sets the rules and approves; the licensee designs, produces, distributes and reports sales. In between there may be an agent and, further down, the retailers.
What the licensor does
- Keeps the mark registered and protected, in the classes and countries where it grants licences.
- Chooses categories and partners, and sets the terms of the agreement.
- Provides the style guide with artwork and usage rules.
- Approves concepts, samples and promotional material, and audits the accounts when needed.
What the licensee does
- Designs products following the guide and submits them for approval before production.
- Produces, sells and distributes in the agreed territories and channels.
- Pays royalties and sends sales reports by the contract deadlines.
- Is responsible for product safety and quality.
A real example
York University’s licensing programme in Canada publishes its licensees’ obligations: a sample or full-colour image of every product for approval before manufacturing, royalties and a report every quarter by the 15th of the following month, product liability insurance, indemnifying the university against damages from defective products, and the university’s right to audit the accounts (York University). The rules vary from contract to contract, but the division of tasks is almost always this one.
And the agent?
When there is one, the licensing agent usually works for the licensor: it finds licensees, negotiates terms and follows approvals and reports in return for a fee or a share of royalties. More in what a licensing agency does.
Where to start
If you are a licensor, the steps are in how to license your brand; if you are a licensee, start from how brand licensing works and the costs in royalties and minimum guarantees. Either way you can write to us from the licensing service page: we work with licensors and licensees.
