Licensing is the process of renting or
leasing an idea or product to another entity
to develop, distribute and sell the product
in return for paying royalty fees to the
owner of such idea or product. The
owner of the product still retains full
ownership. Licensing your product
requires establishing a Licensnig Agreement
which stiuplates the condictions of the
licensing to include the specific timeframe
for the license.
Licensing is a way for entrepreneurs with
limited funding, resources or experience to
get their products sold in the
marketplace and earn an income from it.
The company that you license your product to
is called the Licensee. The owner of
the product is called the Licensor.
Licensing royalties range from 3%-10% of the
product sale price. Royalties are
usually based on the whole sale price to the
retailer, not the retail price.
The timeframe for licensing a product is
usually 5 years. You can renew the
agreement with the same company, or assign
the right to another company. Be aware
that the Licensee will always insist on the
right of first refusal be stipulated in
Things to Note: 1. Licensee
traditionally enphasises the full right to
sell the product worldwide. They do
not wan to be limited to any specific