Ready to Increase Your Revenue with Brand Licensing? Here's What You Need to Know.

  • By Susan Burns
  • 16 Mar, 2016
Have you heard of Harley Davidson’s cake decorating kits, Heineken shoes, or Zippo perfumes? No? Believe it or not, these are actual products (some of them are still for sale), and some of the worst brand extensions that have ever hit the shelves.

Brand licensing, when done wrong, can cause unnatural, and just plain wrong mixes of brands and products. (Colgate frozen entrees, anyone?)

But, when done right, brand licensing can be a great way to increase your revenue, expand your brand and your company, without having to invest in developing, manufacturing, advertising, and distributing new product lines, which maybe isn’t the best use of your resources.

Take Bugatti, for example, and its recent partnership with yacht builder company Palmer Johnson. They have recently released the “Niniette,” a $2.2 million yacht, with personalization options such as gilded bathroom fixtures or diamond-crusted steering wheel. What Bugatti has done right is licensing the brand to a product that reflects its opulence and exclusiveness —luxury yachts--even though their main business is not making boats.

So, while Bugatti is busy getting ready to release the new Chiron later this year, someone else is making inroads into the yacht market for them, launching the Bugatti of the sea. The genius in this strategic brand licensing agreement is that it allows Bugatti to continue focusing on what they do best, namely engineering luxury performance cars while, at the same time, expanding their brand and increasing revenue. Kind of like making money while you sleep. What is not smart about that?

What is brand licensing?

Brand licensing is the process by which the owner of a brand (the “licensor”) gives permission to an individual or company (the “licensee”) to use their brand as part of a product or service, in exchange for a specified portion of royalties, during a set period of time, and within a pre-established territory. All of these aspects are clearly stated in a brand licensing agreement, outlined below.

What are the benefits of brand licensing?

There are several benefits to both parties involved in a brand licensing agreement:

Benefits for the licensor:

  • It increases brand loyalty, as consumers are more likely to choose a specific brand, the more they buy it. This reduces future promotion efforts and expense of future sales.
  • It allows companies to develop their main product to its full potential and provide consumers with complementary products that facilitate a more meaningful and complete experience.
  • It reinforces the idea of reliability, quality and price level of the brand, when the licensed products are manufactured to the same standards.
  • It provides a steady stream of royalty revenue.

Benefits for the licensee:

  • It positively associates the new product with the reputation and good image of the brand, which adds value to the product.
  • The brand gives the new product an edge over its competitors, facilitating marketing and making it more effective.
  • The brand will be easily recognized, which resulting in product awareness, and ultimately, more sales.

Tips for good branding licensing

One of the most important steps towards brand licensing is to protect your intellectual property from the beginning of your business. Don’t put yourself in a vulnerable position. Contact a specialized attorney to trademark your brand and register your copyrights, first and foremost. Then, develop your brand and start looking for licensing opportunities that can help you grow and benefit from your licensee, while providing value as a licensor as well.

As the licensor, you must be very clear about the terms of use of your branding and imaging. These aspects should be stated in your licensing agreement, but most importantly, you need to have deep knowledge of your brand in all its aspects, and have clear, defined goals for the alliance you are about to start.

It is of utmost importance that licensees make every effort to analyze and understand the brand and its consumers. By doing so, the resulting product will be a true reflection of the brand, and not a random object with branding plastered over it. Licensees must produce a high-quality product or service, with standards and style comparable to the internal product, and that can be easily associated with the brand.

Finally, both parties should approach this agreement with a winning and collaborative attitude. Part of the reason why odd products such as Vespa perfumes or Paula Deen’s furniture hit the market is that the brand is so well-known. But in the long run, these disconnected licensing agreements may damage or dilute the brand image. At the same time, licensees shouldn’t look to take advantage of the brand, but rather work hard to give back the prestige and awareness that the brand will give to their products.

Brand licensing can be a great expansion option for a recognized brand. By combining forces, the brand owner and its licensee can reach an entirely different market, and increase their profits, something that could be extremely hard and costly to do on their own. It may be worth considering it, don’t you think?


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More Posts from Susan's Blog

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By Susan Burns 26 Oct, 2017
P.S. There has been a lot of discussion on social media about my post on reading fine print  when installing apps, specifically focused on the Grammarly app. Some people have responded with the interpretation that Grammarly can only use your content to correct your grammar and not for anything else.

I disagree. This is not a correct interpretation, in my opinion.

Even though that interpretation may be based on a provision in the TOS that states you keep ownership of
your content, they still have an unlimited, perpetual, royalty-free right to use it. I won’t repeat the prior
post, but do urge you to read it .

Others have suggested that Grammarly’s TOS are typical of SaaS (software as a service) agreements and,
somehow, that makes it okay. The TOS may be similar, but the products aren’t. Grammarly, in my
experience, crawls through everything you type. Everything.

The other argument proposed by someone is that because this is typical SaaS language, they don’t really
mean that they are going to use your content. Really? Then say so in a clearly-drafted, user-friendly
contract a/k/a TOS.

I have not heard of someone successfully arguing in court that even though they agreed to a license of
their product, they didn’t think the person was really going to use it … and therefore, they shouldn’t be
allowed to use it. If you know of such a case, send it my way.

Again, legal ethics prohibit me from using the service. That aside, I don’t choose to give Grammarly
access to everything I type.

As one person put it, “everything ever typed on the computer, so while it runs in the background, it
gathers password, credit card data, shopping habits, text conversations from Facebook, messenger
services, anything you do... recorded and stored.”

Finally, my posts are my opinion and my legal analysis. I am not your lawyer. And, I am not telling you
what to do.

One of my major focus points with clients is clarity. Fabulous decisions come from clarity. Make a
decision that’s right for you.

I love a great discussion! Keep the comments coming.

MSB
By Susan Burns 24 Oct, 2017

Recently I was engaged in a Facebook exchange among a group of successful business women. Someone asked for opinions on using Grammarly—an app that is marketed as “A FREE, ACCURATE GRAMMAR CHECKER BUILT FOR EVERYONE.”  

The comments started rolling in: “love it!” “best thing I have used in a long time.” “Cuts my writing time significantly.” And more like that.

I actually had installed the free app a few weeks before to give it a test run. I found it to be a nuisance because that little app was popping up and sticking its grammar-nose in every single thing I wrote. My emails. My blog posts. My word documents. That spelled danger to me, and I immediately deleted it.

My curiosity piqued, I checked the Terms of Service (which, admittedly, I should have done first). Here is what I found:

By uploading or entering any User Content, you give Grammarly (and those it works with) a nonexclusive, worldwide, royalty-free and fully-paid, transferable and sublicensable, perpetual, and irrevocable license to copy, store and use your User Content (and, if you are an Authorized User, your Enterprise Subscriber’s User Content) in connection with the provision of the Software and the Services and to improve the algorithms underlying the Software and the Services. (emphasis added)

Here's what you need to know:

  • Grammarly, Inc. is a Delaware corporation. They include in the definition of “Grammarly” not only the corporation, but also all of its subsidiaries AND other affiliates.
  • The definition of “Software” is “the software.
  • The definition of “Services” is … wait for it … “services.” 
  • And, although it is poorly drafted, it seems to be attempting to include any future Software and Services provided by Grammarly, which you recall also means any subsidiary or affiliate.

What does this mean for you?

It means that if you install Grammarly, whether it’s a free service or a paid service, you are specifically giving an unlimited perpetual license to your content to Grammarly and any company they affiliate with and any of their subsidiaries basically for any service they provide now and decide to use in the future.

That means that if you use Grammarly, instead of your own brain or a copy editor, you are no longer the exclusive owner of your content. That means they can republish, provide to third party affiliates, and use your data and materials any way they see fit.

The bottom line is that Grammarly has access to—and the unlimited, forever—right to use your content. Period.

And, once you install Grammarly, it is everywhere . It pops up in every document you create. Every. Single. One. If you don’t believe me, try it yourself.

Of course, lawyers and other professionals with a confidentiality responsibility to their clients are ethically prohibited from using Grammarly. (And, I hope they read the fine print.) But even if you don’t have an ethical responsibility to keep information confidential, do you really want to give up the right to your content?

Think about it! And next time, read the fine print. … or call me, and I’ll read it for you.


​*This post has been updated here .

By Susan Burns 28 Feb, 2017

The driverless car industry is hot and super-competitive. That’s a given. Here’s what’s not hot if you are Waymo, the self-driving car business that was spun out of Google’s parent company:

By Susan Burns 19 Feb, 2017

Recently, there was a trademark spat between Adidas and Tesla. The story piqued my interest because   the big players make mistakes that are instructive for small businesses (only on a grander scale)—and because it illustrates the importance of brand identity and underscores why it’s smart to register your mark.

In a nutshell, here’s what happened: Tesla filed with the US Patent and Trademark Office (USPTO) to register its Model 3, three-bar logo as a trademark. If the registration had been for the purpose of using the mark on a car, there would not have been a problem. BUT, Tesla registered to use its three-bar “E” on clothing. Adidas, a company known for rigorous policing of its brand identity, challenged Tesla’s right to register the mark as confusingly similar to the Adidas three-bar logo. Tesla withdrew its application. Adidas protected its three-bar brand identity.
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