Fashion is one of the trending aspects of our life these days;
I’m the owner of a hairdressing salon and I have been thinking of extending my expertise in selling shampoos, fragrances, etc. But it is going to take decades to make my own brand popular. People have been telling me to license brands that sell shampoos and who already have a big name in the market because it’s easier than building your own company. I am afraid because another brand name is at risk here.
I also don’t think it can be very beneficial to me. Is it comparatively better? Why would a company give me its license to sell? Will I be liable if there is a problem with a product? What is the payment procedure?
Licensing is the activity of negotiating with another party to gain and use rights, in this case, intellectual property rights, in exchange for a price (a fee or royalty). A trademark owner (the “licensor”) and another party (the “licensee”) often enter into a licensing agreement in which the licensor allows the licensee to use its trademark in commerce. Simply expressed, a license gives the licensee access to the property without transferring ownership. Licensing allows fashion brands to grow, complement and reinforce their brands, expand into new areas, and improve their image.
However, because licensing necessarily means the fashion firm is providing the licensee with responsibility for creating products bearing the fashion brand’s trademarks, it is critical to properly prepare and negotiate the license agreement to protect the brand licensing products.
To understand more of Licensing Agreement, read the article below:
Understanding Licensing Agreement
The word Licensing is derived from the phrases license and marketing; it can be described as the commercial usage of copyrighted intellectual property. It could be a real person, a fictitious character, a historical event, or even a company.
One of the goals of Licensing is to project the licensed brand’s image onto third-party products or services. In most cases, a license arrangement involves two parties. Although licensing is now a standard industrial tool, it was not always so. In actuality, it originated in the late 1940s, when Christian Dior began promoting Dior stockings in the United States, establishing a Licensing system for hosiery. The Paris-based design firm began Licensing its neckties the following year.
The terms merchandising and Licensing are frequently used interchangeably. However, there is a distinction that arises from some elements. Merchandising’s qualities are more non-profitable and sales-increasing in nature.
Merchandise items are mostly utilized for advertising to boost sales of the brand’s core products; in general, merchandising products are used to provide incentives or to advertise or brand. Sweets, flags, calendars, and pencils are examples of promotional items.
Innovative brands appeal to both personal and social preferences, allowing for unique cross-promotional possibilities. Clothing and accessories with prints from the gallery’s collections or emblems that are easily recognized can be used to create eye-catching shop displays and promotional materials, such as glossy magazine adverts and feature-length articles.
Why Would a Company License Its Brand Name?
Business organizations can use a variety of techniques and instruments in today’s marketing economy to expand their field of activity and exploit new markets. Licensing has to be considered one of the most effective instruments organizations may use to extend and grow their business among all the numerous possibilities.
Licensing is a great strategy for a brand to expand by entering new geographic regions and market segments that it otherwise would not be able to serve. Licensing can assist a firm in more successfully and efficiently commercializing its intellectual assets or expanding its ongoing operations into new areas than it could on its own.
It is an effective method for lowering the risks associated with expanding a company’s brand. Despite the fact that licensing has a lot of promise for all parties involved, the techniques for negotiating Licensing agreements differ between industries and nations, putting organizations at risk.
Today, a growing percentage of products purchased in the fashion and garment industries are licensed products. A strong unique brand and a well-run Licensing contract with clearly defined responsibilities for all parties involved are the foundations of fashion Licensing success.
To protect an all-brand image and sustain its productive value over time, strict craftsmanship control is required.
The most licensed product categories in the fashion and luxury industries are eyewear and cosmetics.
Luxottica and Safilo are kings of the eyeglass Licensing market, creating eyewear for Dior, Chanel, Marc Jacobs, and others, while L’Oreal and Coty are kings of cosmetics (including perfumes) sector, producing for Armani, Saint Laurent, and Gucci. Licensing in the watch industry isn’t as popular as it is in other industries, although companies like Fossil nevertheless produce for a number of well-known brands.
Is It Worth The Risk?
A product creator approaches a brand owner to obtain access to advertising power and distribution networks, which is how most licensing arrangements begin. To meet previously recognized unmet customer needs, major brand owners may actively seek inventors or manufacturers of complementary products with brand affinity.
From the standpoint of the brand owner, it’s critical to consider the long-term implications of any arrangement. A single blunder can jeopardize the entire brand licensing strategy.
While royalties for the use of a brand and its related intellectual property are a significant incentive for big brands, licensors should always be on the lookout for methods to improve their brand’s existing identity and expand its visibility and market penetration. There are many risks in this sector like Brand deterioration or dilution, breaching former licenses but there are also some benefits that make the risk worthwhile such as increased brand recognition, targeting a whole new audience, revenue being generated without manufacturing or marketing risks, and gaining a new market, etc.
Licensing can be a brilliant method to enhance your business’s possibilities in the fashion sector only if there is synergy between the licensee’s product and the licensor’s brand identification which is essential for a successful brand licensing deal. Brand fit, consumer demand, strong partnership are some factors that promise the success of licensing.
In the wide global brand licensing landscape, entertainment/character is the dominant category. Because most licensed entertainment/character products are marketed to children, overall consistency is more crucial than synergy. Everything from toys to dinnerware and apparel that has been branded with well-known and instantly recognizable characters and logos is considered entertainment/character. Approximately 45% of all licensing transactions worldwide are still made in this category.
When it comes to fashion Licensing, you should be prepared for any problems that may arise. You must have enforceable design and protection rights. Before you start the process, it’s a good idea to register for trademark registration.