Each business needs licensing and since there are different types of licenses, there are many who are interested in understanding what is licensing before starting a business. Licensing is obtaining permission to operate a business at a certain location from the local authority. Licensing also means granting permission for the use of intellectual property rights like patents, technology or trademarks under some defined conditions.
Brand licensing is one of the fastest growing businesses. This is where a trade-mark owner provides a third party with rights to development, distribution and sale of a service or product under a particular trade mark name.
In return, the owner of the trade mark will earn royalties from the sale of the service or product and receive marketing benefits. This is a dynamic and creative process. There are many companies that are interested in brand extension but most do not have the capability to create long term programs.
The reason why many wonder what is licensing is that there is no standard way of doing it. Each arrangement is special and it has unique aims, objectives and requirements. It is important to thoroughly read a license. It is advisable to get the services of licensing professionals or IP professionals before putting a signature to the document.
Each license should be clear to all the involved parties. Individual parties should be all aware of obligations that the contract will place on them. They should also be informed about the conditions that they have to meet and the times within which certain functions should be performed.
The features on a license should be measurable and transparent to all. Each of the parties involved should also be aware of the responsibilities that the other parties should meet. It is also good to understand what is licensing according to financial related obligations and how the calculations for the payment obligations are made.
The dates when payments should be made must be laid out clearly and if possible a complete schedule be there. If there are geographical or territorial boundaries that are part of the license, they should be clearly spelt out. For an investor to determine what is licensing to the trade mark owner, there should be an agreement if the services or products involved can be developed, modified or improved.
If these are allowed, there should be a clear understanding about how they will be protected and who has the right over them. Bonuses and penalties should also be negotiated as part of licensing agreement.