Managing and Supporting a Licensing Program

• Author: Michael Sanford Stone
• Profession: B.A. from Hamilton College and a J.D. from Emory University School of Law
• Pages: 99-120

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CHAPTER 5

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

eectively.

The Power of Licensing

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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?