What Should Be Included In A Licensing Agreement

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What Should Be Included In A Licensing Agreement

Do your due diligence before the agreement. Both parties should carefully consider the other party. Check business credits and continuous management. Ask for a degree. Visit the offices and production sites of the other company. Try to do it. 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. Another important element of a licensing agreement defines the timing of the agreement. Many licensees insist on a strict marketing date for products that are granted to external manufacturers. Finally, it is not in the licensee`s interest to license a company that never markets the product. The licensing agreement also contains provisions relating to the duration of the contract, renewal options and termination terms. Royalties based on a measure related to the sales of a product should be paid to the licensee, along with a report on the calculation of royalties. It is necessary to decide how often and when these reports (and copyrights) are due. In addition, the licensee`s right to verify the books generated by these reports should be part of the license. This agreement may cover different types of intellectual protection: for products (indicate) ______________________For duration of agreement______; for certain durations, ___For Territory______________________ non-competition agreement. The licensee agrees not to allow anyone to compete with the licence in the area and period defined in the agreement. Licensing agreements cover a large number of known situations.

For example, a retailer could enter into an agreement with a professional sports team for the development, manufacture and sale of goods bearing the sports team logo.