Intellectual property licensees use three main types of licensing agreements. This is the granting of subsidiary licences. The licensee may be granted the right to authorize someone to manufacture or sell their products. This depends on the specific terms of the license agreement. One of the most important elements of a licensing agreement is the financial agreement. Payments made by the licensee to the licensee are usually made in the form of guaranteed minimum payments and royalties for sales. Royalties are generally between 6 and 10 per cent, depending on the ownership and the degree of experience and sophistication of the licensee. Not all licensees need guarantees, although some experts recommend that licensees receive as much compensation in advance as possible. In some cases, licensees use warranties as the basis for renewing a licence agreement. If the taker completes the minimum sales figures, the contract is renewed; Otherwise, the licensee has the option of terminating this relationship. A non-compete clause. The licensee agrees not to allow anyone to compete with the licence in the area and period defined in the agreement. If someone has a franchise, there may be a licensing agreement, and there may be several types of licenses within the franchise.
For example, a McDonald`s franchise could include licenses for the use of the McDonald`s logo on products and packaging and another license for the manufacture of its patented processes or ingredients. In the context of the granting of subsidiary licences, the licensee could be allowed to authorize another entity to use the licensed plant. For example, if you`re a movie producer and you`re allowing a song, you still need permission to allow another entity to use the section of your movie in which the song is played. Each licensing agreement is unique and these agreements vary by type (copyright, trademark, patent, etc.). In general, you will find these sections in most licensing agreements: most licensing agreements have standard clauses to cover the most common problems during licensing negotiations. These clauses include: This section limits when and where the licensee can sell his or her property. The fact is that the licensee may be the only entity to sell this product or service in a specific area. A Burger King franchisee, for example, wants to be the only Burger King in a given area.
Without this agreement, the licensee could bring out another Burger King franchise. There are certainly advantages to licensing your business assets, but make sure you take these factors into account when creating a licensing agreement: exclusivity and territory. The licensee is granted the exclusive right to manufacture and sell the product in a given territory. The licensee agrees that others are not allowed to sell the product in this area. This part of the agreement is usually accompanied by a clause. The bargaining power of both parties to a licensing agreement often depends on the nature of the product. For example, a film studio that would grant the image of a popular superhero to an action figure maker could have considerable bargaining power in this negotiation, as the manufacturer will likely benefit from such an agreement. The film studio therefore has the lever to take its business elsewhere if the manufacturer has cold feet. It is important that the manufacturer and the trademark holder be able to understand and live the definition.