Licensing: Rent a Brand

The president of bird-feeder company that negotiated a license deal with Disney explains why it was a success.

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Ever wished you could rent a well-known brand name? Licensed merchandise has exploded in the marketplace in recent years, and the trend isn't limited to lunch boxes. For example, corporate-communications company Cohen/Gebler Associates, in Boston, secured the exclusive rights to Dilbert, the popular comic-strip character, for its training videos. And Opus, a bird-feeder maker in Bellingham, Mass., negotiated a license with Disney in 1993, because John Stone, president of the second-generation family business, wanted to tap the burgeoning kids' market.

So what does it cost to rent someone else's good name? You can expect to pay from 5% to 12% of wholesale revenues to the licenser over the life of the agreement.

And you must also consider the up-front costs. Opus's Stone invested $50,000 in product design, merchandising, and promotion. He worked with Disney through the yearlong design and development process. The payoff? The Disney name helped to place Opus products in about 3,000 stores.

Stone advises other companies considering licensing to negotiate the longest possible contract. "That gives you time to establish the license as a viable way to move product," he says. Work with the licenser and retailers to place your products with similar licensed goods in store displays, he adds, and plan cross promotions with manufacturers that share your license. -- Robina A. Gangemi

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