Marketing. Licensing Arrangement: What Is It?
It is very difficult to give an appropriate definition of licensing arrangement. To understand the licensing arrangement, first, it is the sine qua non to comprehend what is licensing. The Encyclopedia of Small Business states that
“According to Pat Upton, author of Make Millions in the Licensing Business, licensing is “the practice of allowing a manufacturer (also called the licensee) to affix or associate the idea, character, design, or other representation owned by another (licensor) to his products.”
In the most basic terms, licensing is the legal act of granting rights to certain property in exchange for payment. Although licensing is often referred to as an industry, many experts claim that it is actually a marketing tool or concept. So, it can be said that generally the legal permission of exchanging property for payment is called licensing.
In another word, the tradition of permitting the manufacturer or the licensee to associate the idea, character, design, or other representation owned by the licensor’s products is termed licensing. As technology has advanced, sans traditional commodities’ trading and the provision of services, intellectual property rights licensing has become the subject of many transactions in the business world. The main objects of licensing are furnished below:
- To provide licensors with economic benefits
- To open up a novel horizon for licensees to develop new markets for their goods using technology.
Licensing agreement is a very important document for running a successful business venture. When it is quite hard to know the future of the product then it is licensing which yields us the assurance about the future of the products. So it can be articulated that the legal document which gives us the financial provisions between the licenser and licensee, consumer, and quality control of the product is licensing agreement.
Examples of licensing arrangements can be found in a wide variety of products and services. For example, B might wear a shirt having the Nike logo, purchase a toothpaste of Lever Brothers. With that logo on his/her shirt, he/she purchases a school bag with the picture of a comic character on it, etc. Surely it has become the marketing strategy of the future. A company gains many benefits from licensing such as augmenting its revenues with a minimum of expenditure, creating new crazes for its products.
The biggest emblem in the licensing business is entertainment corporate brand licensing, fashion sports, and sport licensing. The licensing field is becoming more competitive day by day. The arrangements between the licensor and the licensee can be found in a licensing agreement which is called a legal document.