Why enterprise licensing is necessary and easy methods to license your small business

Benefiting from your model

Disclaimer: This content material shouldn’t be construed as authorized recommendation. All the time seek the advice of an lawyer concerning your particular authorized state of affairs.

For small enterprise house owners, figuring out easy methods to license a model may seem to be a overseas realm. How have you learnt who to work with and when it’s the fitting time? And most significantly, how do you navigate the enterprise licensing course of so that you scale your small business whereas nonetheless defending all that you simply’ve constructed? Your model is your child. You’ve spent years of your life and a major funding creating it. When you attain success, it may be laborious to provide the reins over to a different group that you recognize nothing about.

All of those questions and emotions are utterly pure and comprehensible. However enterprise licensing generally is a strategic step in rising your model to new heights with out placing the operational load on your self. Learn on to grasp the muse of enterprise licensing, the advantages you’ll be able to anticipate, and the steps to do it proper.

What’s a model license?

Based on the consultants at UpCounsel, “The sort of license often permits a licensee to make use of a product, line, or sure enterprise merchandise. Licensing merely means the leasing or renting of an intangible asset.”

For instance, as a enterprise proprietor, you’ve a novel thought, service or product that’s particular to your model. If you wish to increase your small business by creating extra items below your model identify or rising the supply of your merchandise via one other distributor, you can license your model.

First, you’d trademark the product, thought or merchandise (defending it so no different entity can illegally use or copy it or misrepresent your small business). Then, you’d work with a companion group that may create, distribute, market or promote gadgets below your model identify.

The difficult half is {that a} model license can defend trademarked tangible and intangible belongings, reminiscent of a model identify (as an illustration, “Nike”), in addition to product traces or particular enterprise gadgets.

Utilizing our Nike analogy (try their lengthy listing of logos right here), listed below are generally trademarked gadgets:

  • Brand: the swoosh
  • Tagline:Simply do it
  • Model identify(s): Nike Air, Nike City, NikeFactoryStore
  • Model signature: Air Pressure 1, Air Jordan, Flyknit, Dri-Match

Associated: Trademark vs. copyright: Which one does your small business want?

Know the enterprise licensing lingo

As you embark upon this enterprise, it’s important to grasp the terminology and key definitions concerned with the method. (Particularly whenever you’re within the analysis part making an attempt to unravel the ins and outs of the method). Use this cheat sheet:

  • Licensor: You, the enterprise and model proprietor who desires to hire/lease your model identify, emblem, tagline or a type of your model signature to a different enterprise.
  • Licensee: Your future companion, the enterprise or group that rents/leases the rights to your model.
  • Contractual Settlement: Formal, official doc that outlines the connection between licensor and licensee, together with cost phrases.
  • Royalty: Licensor’s (your) cost, usually representing a proportion of all gross sales previous a sure minimal.
  • Trademark: Authorized safety on your model to stop others from utilizing it. This could cowl a “phrase, image, design, or a mixture of these items that identifies your items or providers. It’s how clients acknowledge you within the market and distinguish you out of your opponents.”
  • Mental Property: Intangible gadgets created by your model that you could legally defend. This refers to “creations of the thoughts, reminiscent of innovations; literary and inventive works; designs; and symbols, names, and pictures utilized in commerce.”

Perceive the probabilities of enterprise licensing

With enterprise licensing, you’ll be able to enhance your model’s attain with out worrying in regards to the manufacturing, manufacturing, and sometimes even advertising (relying on the settlement). It’s the equal of outsourcing enterprise progress, the place the licensee takes on the operational duties.

The perfect half is that you simply’re not simply rising your backside line through royalties but additionally rising model consciousness.

In an ideal world, each events profit. You, the licensor, get to increase your model to new markets, rising attain and discovering new audiences. The licensee creates and distributes a product with current recognition and fame. In different phrases, they’ll skip the model improvement and R&D stage and forgo that preliminary funding. Your licensed merchandise may carry new enterprise to the licensee’s group if you have already got model loyalty along with your current viewers. When gross sales develop, you each see a revenue. It’s a symbiotic relationship.

Rent a authorized skilled

gavel and balance scales

Nobody is aware of easy methods to license a enterprise or model higher than a licensing, trademark or mental property lawyer. Learn articles to acquaint your self with the method, do your preliminary analysis, speak to these in your group with expertise. However, when it’s time to start out the method, you could interact an expert.

And on the subject of figuring out easy methods to license a enterprise and easy methods to do it correctly, you’ll be able to’t merely seek the advice of a lawyer. As an alternative, you could persistently work with one to make sure you’re taking the right steps in model enlargement. For instance, every new firm you’re employed with may probably have a special licensing contract with new phrases.

To make sure you’re appropriately defending your small business pursuits, you must retain a lawyer you belief to assessment any new contract or settlement and talk about any associated issues.

Do the right analysis

Even with a lawyer in your nook, you continue to have to do your due diligence earlier than licensing your model. The order of analysis vs. hiring a lawyer generally is a little little bit of a “rooster or egg” situation. Some legal professionals could ask for those who’ve completed correct analysis earlier than contemplating licensing alternatives. Others could possibly assist with the method. Regardless, you wish to do your individual evaluation to make sure it is a sound enterprise choice on your particular model, product and market. Your lawyer can then assist with the nuts and bolts and information you to make sound choices.

Assess the panorama

When deciding if it’s time to license your model, you could first assess the general market, aka your business or area of interest, in addition to your present enterprise standing. Do you’ve sufficient model recognition {that a} third-party enterprise would wish to produce and distribute merchandise below your identify? Does your model clearly resonate along with your goal demographic?

You could have to increase your preliminary marketing strategy.


When approaching potential enterprise companions for licensing alternatives, they should perceive your distinctive promoting factors. What makes your model totally different from the remainder? Is there sufficient demand inside your goal demographic in addition to progress potential? Organizations could strategy you, or vice versa, however both method, you could place your self as a longtime enterprise to make sure the very best model licensing alternatives. A part of that’s pitching your small business as a very good companion for them.

Furthermore, you could consider the aggressive panorama. Is your area of interest already saturated with different giant, well-received manufacturers, or is there room on your model to succeed, develop and disrupt? It doesn’t matter what, you’re going to compete for shelf area (or digital area in ecommerce) and shopper consideration, however aggressive analysis will guarantee your model can stand by itself.

Develop a model license technique

As we’ve talked about, your model is your child. You wish to be protecting of it and never solely ensure you’re working with the fitting folks but additionally utilizing the fitting ways to succeed in intentional outcomes. That’s why creating a technique may help you define your objectives and ensure you keep true to your model narrative and story.

For instance, say a part of your model story consists of individually made merchandise by feminine creators. A purpose your clients love your group is that you simply deal with sustainable practices and dealing with these particular person creatives. If that’s a trademark of your narrative, you probably don’t wish to license your model to a giant field retailer that can mass-produce merchandise below your identify. You’ll lose model loyalty by not staying true to your group’s rules and values.

Creating a basis that outlines your short- and long-term objectives will be sure that as you increase, you’re doing so in your phrases, and also you’re not getting sidetracked with irrelevant alternatives.

Discover the fitting enterprise companion

two people shaking hands at desk

One other arm of being protecting of your small business, model and pursuits is discovering the fitting licensee. Going into enterprise with somebody is a critical choice, and also you wish to make sure that it’s a match for each side.

To your functions, you wish to discover a companion with expertise in your market, acceptable assets and distribution channels, and monetary stability. If relevant, check their merchandise and make sure its appropriate high quality. As well as, search out an entity that can share and perpetuate your model values and imaginative and prescient.

There’s nothing like testimonials from their different present licensors. Ask for references or to talk to their present companions to get a way of their course of. Search the counsel of your lawyer as nicely to vet potential companions.

There’s at all times danger concerned in coming into a brand new enterprise partnership, so above all, ensure you’re snug with any group and its representatives earlier than you enter right into a contract.

Make the most of model licensing alternatives

Whereas we’ve already established the foundational the reason why model licensing is helpful, there are different extra particular benefits for small enterprise house owners. When you decide on a enterprise licensing settlement, you’ll be able to anticipate the next perks:

  • Check new markets: By licensing your model to a third-party group, you’ll be able to check the success of latest places and markets with out an excessive amount of upfront value.
  • Management your model story: With a trademark and a licensing settlement in place, you keep management of your mental property and creations, plus how your model is perceived to your expanded viewers.
  • Outpace the competitors: When you perceive the aggressive panorama and safe a enterprise licensing settlement, it’s simpler to realize a bonus in opposition to your smaller opponents through increasing product availability and presence.
  • Acquire new enterprise companions and information: When working with a licensee, you develop a enterprise relationship with a well-established and profitable group. As such, you’ve a front-row seat to how they market and distribute your branded merchandise, gaining invaluable new insights and experience.

How one can license your small business the fitting method 

When licensing your model, your small business’s fame is at stake, and there’s rather a lot to think about. Use this information to carry out the fitting analysis and lay the muse of enterprise licensing.

Keep in mind, enlargement for enlargement’s sake gained’t yield outcomes.


First, you could construct your model and create a loyal group of supporters. Then you could dive into a good quantity of analysis to make sure you’re in a very good place to develop your model through licensing. Lastly, earlier than you companion with one other group, have the right authorized protections in place, a retained lawyer that can assist you via the journey and a clearly outlined plan for your small business objectives and aims.

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