Licensing and distribution expand business opportunities and increase profitability as you reach new vertical and geographic markets and customers. The San Diego business attorneys at the Watkins Firm apply our 40+ years of experience and legal skill to guide you efficiently through each step of the process.
What are Licensing and Distribution? How are They Different From One Another?
What is the difference between licensing and distribution and how might each strategy help your company to reach new levels of profitability by expanding your markets and customer base?
Licensing and distribution are two separate forms of expanding your business through the efforts of others. It is important that licensing and distribution agreements are carefully crafted and reviewed to protect your company’s intellectual property and the brand you have worked so hard to build. It is also important not to confuse “franchising” with licensing or distribution. Franchising requires an entirely different and more complex process tailored to each unique state where you wish to offer franchises.
Licensing and distribution expand business opportunities through working with others to reach out and serve new geographic and vertical markets. These are customers your company might never reach without extensive investment in infrastructure and people, as well as the years required to learn the markets and gain awareness and credibility.
Licensing contracts allow businesses in other regions of the country, different vertical market niches and global marketplaces to offer and utilize the intellectual property and brands of your company in return for a contractual fee. Intellectual property is the registered creations of your company such as designs, processes, logos, brands, trademarks, copyrighted materials, music, art or other “intangible” assets.
Intellectual property must be protected and controlled, and a licensing agreement allows you to do so. Under the agreement, your company retains all rights and control of your own intellectual property, but you allow another company to use it in some fashion in order to make money. You charge a “royalty” or a “fee” to your business partner in return for the license to use and profit from your company’s intellectual property.
An effective licensing agreement should establish strong, enforceable guidelines to carve out specific types of unique customers and/or geography the licensee may pursue.
Distribution is an entirely different vehicle altogether. Distributors are an external entity who wish to sell your company’s goods and/or services while bearing their own expenses, by either purchasing the products or services at a discount and marking them up or to develop orders on behalf of your company in order to receive a commission when these orders are fulfilled.
Distribution agreements usually establish a specific geographic “territory” or “vertical market” limitation that provides the right to distribute your company’s goods and services in a specific manner within that protected or regulated territory. Your company achieves a new channel of sales and profitability without having to incur the risk and expense of developing a sales force, technical support staff and physical facilities to sell and support your goods and services.
Licensing and Distribution Expand Business Opportunities for Your San Diego or California Company
Are you interested in developing new streams of profit from markets and customers you are not presently able to reach and/or serve? Licensing and distribution expand business opportunities for your San Diego or California company without the need for substantial investment, hiring and the development of infrastructure to enter new geographic or vertical markets. These agreements allow you to leverage the unique products, services and intellectual property of your corporation to allow the efforts and risks of others to open new business channels and resulting profits.
We invite you to review our podcast Episode 15 – Contract Law as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
