What Is A Licensing Agreement

The bargaining power of both parties to a licensing agreement often depends on the nature of the product. For example, a film studio that would grant the image of a popular superhero to an action figure maker could have considerable bargaining power in this negotiation, as the manufacturer will likely benefit from such an agreement. The film studio therefore has the lever to take its business elsewhere if the manufacturer has cold feet. An example of a very common property contained in licensing agreements is the image of a cinematic superhero. Toy manufacturers will often allow it to sell action characters that are much more likely to be purchased if they are based on a popular superhero. Another common example is the licensing of a song for an advertising campaign or for use in a movie. In the fast food market, there are a number of franchise-based businesses, where a franchisee holds the rights to the name, products and promotional material of the main company. That is all that both sides want to add. Some license agreements contain confidentiality agreements such as .B.

This clause would prevent the taker from disclosing proprietary information or processes. One of the most important elements of a licensing agreement is the financial agreement. Payments made by the licensee to the licensee are usually made in the form of guaranteed minimum payments and royalties for sales. Royalties are generally between 6 and 10 per cent, depending on the ownership and the degree of experience and sophistication of the licensee. Not all licensees need guarantees, although some experts recommend that licensees receive as much compensation in advance as possible. In some cases, licensees use warranties as the basis for renewing a licence agreement. If the taker completes the minimum sales figures, the contract is renewed; Otherwise, the licensee has the option of terminating this relationship. A licensing agreement is a written contract that gives you permission to use the property of another party under certain conditions.

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