Licensing and distribution can expand your company and profits as you enter new geographic and vertical markets. The right licensing and distribution relationships help to reduce risk and save the capital expense of building out internal capacities when other companies are already in position to leverage market opportunities.
How Can Our Company Leverage Licensing and Distribution?
The business attorneys at the Watkins Firm can guide you efficiently through each step of the process. 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 Your Company’s Intellectual Property
Licensing and distribution can expand your company and profits by leveraging your own intellectual property. 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, recipes, 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.
Distribution Agreements
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. This can be accomplished by 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. Generally, supply and distribution agreements are usually either exclusive in nature, selective, non-exclusive or sole (territorial). Your company remains in complete control of how your products and services are delivered within the specified territory.
Licensing and distribution can expand your company and profits in an immediate timeframe and with manageable risk. Your company achieves new channels of sales and revenues without having to incur the risk and expense of developing a sales force, technical support staff and physical facilities and the assets required to sell, deliver, install and/or and support your goods and services.
The experienced licensing and distribution attorneys at the Watkins Firm have more than four decades of experience in these matters. If you are interested in expanding opportunities for your company 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.
