| Brand license agreements often result in complex relationships between
licensors and licensees that impact multiple stakeholder groups. These agreements do not always reflect key marketing objectives or include terms that properly leverage brand image. Alignment of the licensor's marketing objectives with the licensee's business objectives is essential to optimizing the licensing benefits for both parties.
Goldmarks' Licensing Alignment services include the evaluation of trademark license relationships and development of strategies to increase the licensing benefits or value for licensors and licensees.
Typically, the focus of the brand license agreement is on financial metrics such as royalty rates and minimum royalty guarantees. As a result, the licensee's performance is based on metrics that do not emphasize or measure the marketing benefits created by licensed products. This is a serious deficiency in many license agreements and relationships.
It is important that license agreements reflect marketing objectives of both
licensor and licensee. Performance should be evaluated based on clear
metrics in the agreement and then adjusted to reflect significant changes in
business conditions. Unfortunately, divergent business objectives make it
difficult to create fair, balanced agreements. In addition, negotiating
leverage and prowess are not always equal between the parties.
Alignment of the licensor's marketing objectives with the licensee's
business objectives is essential to optimizing the licensing benefits for
both parties. The end-goal is to develop terms that reflect these objectives
and integrate related metrics into the license. Regular performance reviews
and adjustments to license terms should also be considered as part of the
license alignment process.
Although sales and royalties are important elements of the license
agreement, there are other metrics that can be incorporated into the license
to create 'alignment' and better reflect the interests of licensor and
licensee. From the licensor's perspective, these metrics should include
brand image, customer satisfaction, and loyalty. From the licensee's
perspective, the metrics should include distribution, sales, and profits.
See related paper
‘Licensing Alignment’ is a service mark of Goldmarks Company.