Licensing and distribution agreements leverage your intellectual property allowing you to increase profits by expanding into new vertical or geographical markets. Licensing is the legal term for allowing another company – here in the US or abroad – to use your company’s logos, business products, trade names, trademarks, images, copyrighted materials, software or other intellectual property. The licensing agreement should clearly establish the time frames and geographical markets involved, as well as how the intellectual property may be used. You may allow your logo to be placed on apparel or for toys and other tangible products. An effective licensing agreement should provide “royalties” including an up-front payment, and a monthly fee or a percentage of sales or profits.
Distribution is different than licensing. A distribution agreement allows another business or individual to purchase your company’s products and re-sell them at a profit. Distribution agreements may include the use of intellectual property, but cannot control other factors such as operational procedures, training or processes. Licensing and distribution agreements leverage your intellectual property without the hassle, expense and risk of franchising.
The more control your company places on a licensing or distribution agreement, the more you risk establishing what should legally be defined as a “franchise.” Every state has unique laws regarding franchising, and there are substantial reporting requirements and legal structures that must be in place in order to offer a “franchise.”
The Watkins Firm has decades of experience in the development and implementation of licensing and distribution agreements and other business contracts. We will work with you to discuss how to leverage your established intellectual property so that you may reach new markets and opportunities. If you are developing strategies to license or distribute your company’s products and intellectual property we invite you to contact us or call for a free and substantive consultation at 858-535-1511.