You have a licensed product, how do you distribute it?
The market is always changing, and as a result, businesses are always on the hunt for new ideas. This is where licensed products come in. Licensed products offer a lucrative way to earn a living and exercise the creative muscles in your body. In short, licensing is the selling of intellectual property—patents, copyrights or an idea—to a person or business with the means and desire to produce it for a profit.
Licensed products can be very profitable for the entrepreneur, the licensor and the licensee. Oftentimes, an entrepreneur will license a product to a manufacturer or distributor to distribute the product for him or her. However, licensed products come with a range of restrictions that are vital to recognize.
Here is how to distribute a licensed product and have a successful relationship with a licensor.
When distributing a licensed product, it’s vital to stick to the terms and conditions laid out in your licensing agreement. This contract delineates a specific geographic location in which the licensed products can be distributed and sold, as well as how long the license is valid for and for what purposes it may be used. Selling in unauthorized channels may put the licensor at risk. The licensor may not have trademark rights in the region or another licensee may be authorized to sell in the channel or territory. This is why it’s important to stick to the contract and only distribute the licensed product in the agreed upon region. Avoid incurring penalties and hurting important business relationships.
Another important restriction that influences how to distribute licensed products is the fact that oftentimes licensees are limited to selling their products to authorized retailers. This stipulation simultaneously limits and benefits the distribution strategy, as items can appear exclusive, but the customer base is limited.
Furthermore, it’s also important that the distributor of a licensed product is able to produce enough volume to meet the demands of the retailer or retail chain and meet the needs of the licensor. Not only are there shipments and deadlines to meet, but royalty fees and a yearly minimum to pay to the licensor, so be sure the marketing objectives align with the distribution strategy and the supply and demand. We want everyone to profit and succeed from the distribution of this licensed product.