Most trademark licensing relationships are defined and evaluated based on the terms in a license agreement contract.
In the case of a brand extension license, there can be a lot at stake, including the health and wellbeing of the licensor's brand. Surprisingly, many license agreements do not include specific terms or requirements that reflect key marketing objectives.
This lack of "license alignment" can be a serious deficiency in the license agreement that impairs the licensor-licensee relationship and limits the licensed business.
Careful planning can go a long way in creating successful new licensed businesses; this article, however, focuses on problem situations with existing brand license relationships and agreements.
Trademark licensing arrangements attempt to leverage the so-called goodwill and positive associations and relationships that are related to specific pieces of intellectual property (e.g., artwork, brands, characters).
In the case of a consumer product or service, the brand is licensed and extended into a new or related category to generate incremental sales and profits for the licensee, while generating royalty revenue and marketing benefits for the licensor.
The license agreement attempts to define a complex relationship between licensor and licensee that has an impact on various stakeholder groups, such as suppliers, employees, resellers and consumers.
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