Licensing Agreements Between Companies


A licensing agreement is a written contract between two parties, in which one landowner allows another party to use that property under a number of parameters. A licensing agreement or licensing agreement usually involves a licensee and a licensee. Prepare the property first. If you are selling or buying a license for a product, make sure that ownership of that product is clearly stated in the agreement. Also, make sure that no one else uses the asset (z.B. a trademark) and that the trademark is registered or subject to copyright registration. You don`t want to enter into a licensing agreement and find out that someone else is questioning the property. Partial agreements. In the licensing agreement, as with other types of contracts, there may be sub-agreements. For example, the licensee may require a confidentiality agreement to prevent the licensee from disclosing proprietary product features or processes to others.

The taker may require the donor to sign a non-compete agreement to prevent the donor from breaking the agreement by allowing another person to sell the product in the exclusive territory of the taker. In a typical licensing agreement, the licensee undertakes to make intellectual property rights such as technology, brand name or licensee know-how available to the licensee. In exchange for the intellectual property of the licensee, the purchaser usually plays the donor a pre-feeding and/or a licence fee. A licence fee is an ongoing fee paid for the licensee`s right to use intellectual property. 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. Or a small manufacturer could concede a production technology owning a larger company to gain a competitive advantage rather than investing the time and money to develop its own technology. Or a greeting card company can agree with a movie distributor to create a series of greeting cards that carry the image of a popular animated character.

In May 2018, Nestlé and Starbucks entered into a $7.15 billion coffee licensing agreement. Nestlé (the licensee) has agreed to pay $7.15 billion in cash to Starbucks (the licensee) for exclusive rights to sell Starbucks products (single serving coffee, teas, beans, etc.) through Nestlé`s worldwide distribution network. In addition, Starbucks receives royalties from coffees and packaged teas sold by Nestlé. 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.