Brand owners are continuing to use licensing as a fast route for expansion. We’ve recently heard about plans for Toys R Us and Reebok – good examples of brands that have been acquired and will now expand via strategic global license agreements.

There is now daily news about brands accelerating their expansion into the digital space, collaborating with online games and launching NFTs. The majority of this activity is based on license agreements.

But many brands don’t get out of the starting blocks where licensing is concerned. We see so many businesses with valuable IP which is not being maximised.

Many IP owners don’t have licensing on their radar, or they’ve dabbled but haven’t really got going, or they have placed it in the ‘too hard’ category. Others who have given it a go without involving experts, can find that things really didn’t go to plan and then are too afraid to try again.

One key area that has been a recurring theme we’ve seen over many years is that a lack of ‘operational readiness’ is often what stops brand owners from licensing at all, or licensing successfully.

There are many reasons, but these are the most common:

• Lack of alignment on strategy
• No expertise and/or resource
• Processes not in place
• Licensing not integrated into the wider business

Lack of alignment on strategy

There can be many differing points of view on whether licensing is the right way to go to maximise the value of any IP, and indecision or lack of agreement around strategy can lead to disjointed or slow execution or no action at all.

Sometimes a strategy is implemented but without full buy-in from leadership or business units, which leads to a lack of support down the line.

For licensing to be successful, the wider business needs to be aligned to a single, clear strategy, ‘someone’ needs to have responsibility to execute, (be that directly or using external expertise,) and then processes within the business need to be in place to manage ongoing relationships with licensees effectively.

It sounds logical but it’s amazing how many brands don’t get this right.

No internal expertise and /or resource

For some brand owners they simply don’t know where to start. This is a particular issue with smaller business and brands. It’s not unusual that there is no one with any licensing experience within the business.

Often, the initial requirement for support is limited in scope. Some IP owners just want help with one license agreement or need some initial guidance or handholding, but don’t always know who to ask.

Understandably, many agencies, who almost always work on a commission model, only want to work with well-known brands where they can earn a decent commission.

Where time and/or resource is limited it can mean that licensing just never gets off the ground.

Processes not in place

Once license agreements have been negotiated, there are processes required around product development and marketing, legal and finance and people across the business need to be pulling together to make sure that the experience of licensing for both the business and the licensees is smooth.

Once on board, licensees will want to move quickly as they may have financial obligations, factory slots and customer delivery expectations to meet. Approval decisions for product development and marketing need to be made promptly by the brand owner for example, but where the processes are not in place for this, it can cause launch delays which ultimately impact revenue.

Lack of process is of course not common to licensing activity, but it can be a key reason why licensing seems much harder than it needs to be and not as successful. 

Licensing not integrated into the wider business

Licensing is often treated as an ‘add on’ to the business, not as an integral part. This can happen with larger businesses and brands and might be because the revenue is so much smaller than that generated by the core business; perhaps seen as a bit of a side line, or even a distraction.

We see this with many larger brand owners who have a designated licensing person or team who may work with a licensing agency, or a number of agencies, but largely speaking the agreements and activity are handled totally separate from the activity of the core business. Within some brands, other teams within the business have no idea there is even licensing going on.

The licensing teams themselves can also be guilty of not keeping the wider business informed. We see this happen where the legal team is perhaps only informed of a new license agreement once all the commercial terms have been negotiated and then there is a scramble to register trade marks for a deal that is ‘urgent’.

Those brands where licensing is treated as an integral part of the business are often most successful.

If you’d like help with any of these areas, please let us know. Or you might like to join our free webinar on 17^th February which will cover some of these topics in more detail:

Determining Your Brand’s Readiness for Licensing: Business Model and Operational Considerations.

For more information and to register click here