Managing and Supporting a Licensing Program

AuthorMichael Sanford Stone
ProfessionB.A. from Hamilton College and a J.D. from Emory University School of Law
Managing and Supporting
a Licensing Program
If you are taking a strategic approach to licensing, you wil l be
(must be) involved and engaged through the entire process.
is means that aer you have signed a license agreement with a
licensee, the work doesn’t stop—you don’t stop paying attention.
Instead, you become an active manager of the relationship and
support the licensee.
As you may have noticed, this step was listed under the strate-
gic actions of the last chapter. But it is such an important subject—
and so oen a neglected or misunderstood responsibility—that
it requires its own chapter. Being diligent about managing and
supporting a program can be t he dierence between good and
great results, failure or success. is process begins before a license
agreement is even signed.
Let’s start with a discussion of the information you wil l need
to gather during the potential licensee due diligence phase in
order to later support and manage the program consistently and
The Power of Licensing
Preliminary Information Goes a Long Way
Ideally, brand owners begin collecting information before a license
agreement is signed. Assembling data about targeted product cat-
egories and implementing other information-gathering tact ics are
part of the strategic approach. A great deal of usefu l knowledge
about how to manage licensees can be obtained during the pro-
spective licensee vetting process. e term due diligence applies
here. Brand owners oen fail to vet their licensees rigorously, an
early and important step in the process that helps mitigate risks
and avoid problems later on (a subject that is discussed in greater
detail in t he next chapter).
But before risks can be mitigated, information must be gath-
ered . Keep i n mind t hat you might b e colle cting this t ype o f infor-
mation from several potential licensees in the same category before
you make a decision on which company might be best. Here’s a
critical caveat: Be wary of potential partners who intend to use
your famous brand as a way to enter a new market in which the
partner has never sold a product. Also watch out for those who
want to use your famous brand to develop a product or product
line th at is entirely new to t he partner. Your famous bra nd should
not be used as a guinea pig by a potential licensee. If this is the
case, your due diligence process should reveal it.
During this process, brand owners discover information
that will help drive success of the licensed product and can
use this information when managi ng the licensee and holding
the licensee accountable for its actions in support of the brand
license. When conducting due diligence, the following prelim i-
nary questions are important when vetti ng potential licensees:
1. W hat are the company nancials, including current
and histor ical operating resu lts, credit infor mation, and
business growth potential? Also, is there other historica l
information about the company that may be useful?

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