Looking for a way to grow or expand your business?  Consider distribution or licensing to increase profitability and expand your business into new markets.  The Watkins Firm has served San Diego’s business community for more than four decades.  We have extensive experience in licensing and distribution agreements.  Our business contract and intellectual property attorneys have decades of experience helping our clients to leverage their unique products, processes and intellectual property to reach new markets and expand profitability.

Many business owners confuse issues of licensing and distribution with franchising. Franchising requires extensive legal documentation, contracts and (depending upon the state) registration in a given state.  A strategy to employ distribution or licensing to increase profitability can be an easier and less risky strategy to achieve the growth you seek.

Licensing is usually an agreement between your company and another business or individual to allow the use of your company’s intellectual property.  This can include but is not limited to:

• Unique products
• Logo(s)
• Trademarks
• Copyrighted Materials
• Software
• Processes

You collect a fee or royalty for the use of your company’s intellectual property.  For example, a small local business may want to place your company’s logo on a t-shirt.  A licensing agreement provides authorization for them to reproduce your logo in exchange for a given fee or royalty.

Distribution is another strategy to extend your products or services to additional vertical or geographic markets.  A distribution agreement allows another business or individual to purchase your company’s products and/or services for a fixed price and resell them within a protected territory or vertical market space.  The details of how your products or services are distributed and marketed must be left to the other party in order to avoid the legal establishment of a “franchise.”

Pro-Tip: “Contracts determine how much you pay for materials and labor and everything else. And also contracts determine how much you charge and how much you can collect. If you don’t have an understanding and detailed description of what you’re going to pay other people and what you’re going to get paid written down and thought about, you’re going to have a little bit harder time running your company.

The same thing is true for distribution and licensing agreements.  These important contracts allow your business to reach into new markets and new opportunities without a huge investment of capital and time.  However, its important to understand the protections required to guard your intellectual property and unique corporate trade secrets in a licensing or distribution scenario.

Nobody fights unless there’s money to be made or lost. And if you have an agreement that identifies what everybody’s rights and obligations are ahead of time, who holds the intellectual property or trade secrets and what rights are given to distribute or apply them, then you won’t have a fight because everybody will know. But if there’s no agreement, then you’re going on. People’s understanding. And when money is involved, emotions are involved and they’re understanding changes to fit what they want. Right. But if there’s an agreement there, that’s already covered all these, what ifs, then their emotions won’t run wild and they’ll realize they’ll be bound by what they agreed to before. And so you’ll end up without a big dispute.” – Dan Watkins, Founding Partner

A decision to use distribution or licensing to increase profitability can expand business opportunities into new markets.  We invite you to review our podcast Episode 19 – Your Business Attorney is a Valuable Partner as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.   Our skilled business attorneys provide insight, understanding and the legal services necessary to protect your interests while expanding the reach and profitability of your organization.