The Brand Licensing Process - Step 8: Establish Business Plan

1. The Brand Licensing Process STEP 8: Establish Business Plan PETE CANALICHIO A licensee is given the right tools to be successful. A Business Plan is Essential 1. Monitoring the business and setting achievable targets maximize use of the license. 2. The business plan should start with a firm understanding of the licensor’s brand and category positioning statements. 3. Key targets from the licensing contract are cited in the business plan, including: Minimum sales Minimum guarantees Royalty rate 4. The business plan should also contain a clear understanding of: Product development /commercialization timeline, SKUs they plan to sell including Any new products that they plan to develop Key retailers where the licensee plans to sell their licensed product over the next year. 5. The sales plan should be built by month, by retailer, and if applicable, by region. 6. Projected royalties should be calculated based on the sales projections and reviewed against minimum royalties to assess the robustness of the plan. Annual Business Plan 3,000,000 350,000 Licensee Name: Submission Date: Royalty Rates (%): Minimum Guarantees: 2009 Licensor Budget: 2009 Licensor Budget: Licensee Contribution: Licensee #1 17-Nov-09 5, 7.5, 10 100,000 12% 2009 Licensor Estimate: 2009 Licensee Estimate: Licensee Contribution: 3,500,000 375,000 11% Sales & Royalty Summary Goal 2009 Comparison 08 Actual vs. 09 Budget 2008 09 Budget vs. Estimate Actual 2,500,000 Budget Estimate 40% 7% Sales 3,500,000 3,750,000 40% 7% Royalties 250,000 350,000 375,000 Retailer Summary Goal 2008 Sales 2009 Sales Royalties Royalties % of Estimate Retailer 21% 15% 11% 11% 10% 10% 9% 4% 3% 7% 77,000 57,300 42,500 41,100 37,900 36,800 32,000 14,400 11,000 25,000 770,000 573,000 425,000 411,000 379,000 368,000 320,000 144,000 110,000 250,000 65,800 47,500 37,800 29,900 10,800 10,700 9,700 7,500 5,500 24,800 658,000 475,000 378,000 299,000 108,000 107,000 97,000 75,000 55,000 248,000 Wal-Mart Target The Home Depot Lowe’s SAM’s Club Costco SEARS Kmart Kohl’s Other Total 2,500,000 250,000 3,750,000 375,000 100% Product Summary Goal 2008 Sales 2009 Sales Product Royalties Royalties % of Estimate 21% 15% 11% 11% 10% 10% 9% 4% 3% 7% 77,000 57,300 42,500 41,100 37,900 36,800 32,000 14,400 11,000 25,000 770,000 573,000 425,000 411,000 379,000 368,000 320,000 144,000 110,000 250,000 65,800 47,500 37,800 29,900 10,800 10,700 9,700 7,500 5,500 24,800 658,000 475,000 378,000 299,000 108,000 107,000 97,000 75,000 55,000 248,000 A B C D E F G H I J Total 2,500,000 250,000 3,750,000 375,000 100% Dashboard Reviews 1. On a monthly basis the licensor will review the business estimate against the plan. 2. Monthly projections are laid out with justifications for any increase or decrease. 3. The results are used to maximize opportunities and to develop the business plan for the following year. 4. There are quarterly and annual reviews for comparing the sales performance. Audits These audits include a review of the licensee’s financial and product development records, and social compliance audits of its approved factories. 1. Social compliance audits are conducted whenever a new licensee or facility is made part of a licensing program. 2. Business audits are performed routinely to ensure the licensee is complying with the terms of the agreement. Discrepancies Any discrepancies found in a social compliance audit that can be harmful to the facility’s employees must be resolved before the facility can be used. Licensee business audits that turn up any inconsistency are reviewed for the seriousness of the error. A discrepancy related to selling unapproved product or selling product in an unauthorized method can result in termination. There are significant penalties for sales of unapproved or unauthorized product. Royalties related to these sales typically are equal to the sales value themselves. Minor infractions are resolved by correcting the problem in a prudent and expeditious fashion. Summary The goal is not to achieve the license but to make a success of it and the activities that follow the signing of the contract. These processes, if executed well, can ensure huge success of the licensing program. If either the licensee or the licensor do not live up to their commitments, sales is affected, and the reputation of the brand. 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