The 5 Stage Licensing Contract Negotiation Process: Introduction

1. The 5 Stage Licensing Contract Negotiation Process: Introduction PETE CANALICHIO Parameters of a Contract In every licensing contract there are certain deal terms that define the structure of the contract. The deal terms include such parameters as the term of the contract, where the licensed products will be sold, what royalty rate will be paid and what trademarks will be used. The value of these terms are unique to every licensing contract and must be negotiated between the licensor and the prospective licensee. The best set of deal terms are those that allow both parties to achieve a successful long-term licensing program. The licensor has the stronger position in the negotiation because he knows that prospective licensee wants to license their company’s brand. The licensor can and should ensure the brand is protected and shareholder value is maximized. The contract is doomed to failure if the terms are so restrictive or handcuff the licensee from being able to gain a sustainable and growing revenue base. The license will fail if the terms are so expensive that the licensee cannot recover their investment. Win-win Negotiating Tactics Successful licensors keep the end in mind and practice win-win negotiating tactics. Smart licensees will have identified several choices of brands from which to acquire a license and will set limits on what deal terms they will accept, regardless of their brand preference. Both parties can shake hands on a set of terms they know will allow them both to be successful. The internal process that licensors follow before signing an agreement with a licensee should be discussed, particularly, the tools and documents used to enable licensors to track the agreement. Brand owners and manufacturers who wish to build a best-in-class program should familiarize themselves with these documents and the process. Stage l Stage ll Stage lll Stage lV Stage V Understanding Deal Terms Negotiaion Strategy Agreeing to Deal Terms Drafting the Agreement Signing the Agreement Figure 1 : 5 - Stage Contract Negotiation Process Grab V aluable Resources from Brand Licensing Experts for 100% Free Today Are you interested in extending your brand’s influence, strengthening consumer relationships, and generating unlimited revenue from guaranteed royalty payments? Get Your FREE Membership Today PeteCanalichio.com/fast-track PETE CANALICHIO