An Ugly Expansion
Liliana Lovell's expansion plans for her famous New York City honky-tonk bar should have been easier. The movie "Coyote Ugly" made the hard-drinking cowgirl bar internationally recognizable, but when Lovell set out to license her concept, she discovered that protecting her bar's image wasn't an easy task.
"I had an opportunity to expand my company when the bar had become famous, and it was a means to a bigger picture," Lovell says. It was a big opportunity fraught with even bigger consequences, as Lovell discovered when her brand's integrity began to suffer.
Some of the licensees Lovell chose, though all experienced in bar ownership and management, took some liberties with the concept and introduced decidedly non-Coyote-like features into the mix. One bar even introduced Karaoke night, which put a bad taste in Lovell's mouth. "I'm not necessarily against Karaoke night, but when they licensed from me, they licensed an already existing concept, and that concept does not take well to something like that," Lovell says. "It bothers me when I feel [licensees] are doing something that is not true to the concept."
Many business owners fall into this predicament when trying to expand their companies. Licensing sounds like a good strategy -- offer an established business with a brand and reputation already intact to people willing to license the concept. What could be easier?
But when expanding a business, whether through partnerships or licensing, you're putting your company's brand on the line, the brand you've established and have become the passionate caretaker of. "Making a few missteps in beginning can cause significant harm to your brand," says Todd Gentzel, brand expert and Chief Marketing Officer of Yaffe|Deutser in Houston. And once those mistakes are made, it's hard to reclaim your brand's integrity.So how do you avoid killing your brand when licensing your business concept? Lovell, Gentzel, and trademark attorney Adrienne White have a few tips.
Register your trademark.
Apply for a federal registration of your trademark as soon as you have the intent to use it in the public realm. This will establish, legally, that you've purchased the rights to do business under your business's name and can help protect your brand.
"You can do this online by yourself, but it can be complicated," says Adrienne White, a partner in Burns, Doane, Swecker & Mathis, L.L.P.'s trademark practice group, in Alexandria, Va. In this case, she suggests having the assistance of a trademark attorney who will understand what constitutes trademark use and can be sure that mistakes aren't made during the process that might affect the validity of the trademark.
Lovell seconds White's recommendation to hire a competent trademark attorney. The attorney can be diligent with trademark research and applications, (Lovell owns trademarks in around 70 countries), and can be instrumental in enforcing them.
Lovell also suggests doing such simple things as offering a money prize to people who locate trademark infringers through your website. She also does electronic searches for companies doing business under the Coyote Ugly name. "There are agencies that will monitor DBAs coming in whatever industry your in, and it's a certain fee per year, they might not catch everybody, but they might catch a few," Lovell says.
Be active in controlling the use of your brand.
One step to being active in the control of your brand is to create a licensing agreement. In the agreement you'll want to spell out the control provisions, usage guidelines for your company's trademark, including any size, color, etc. of your trademark, any special qualities your trademark represents and how they're specifically to be communicated, the necessity for periodic review of products and services offered by the licensee, and a clause that addresses the revocation of the license if quality is not consistent or the trademarks are misused.
But don't get lax because you think you've got it legally tied up with an agreement. "Agreements won't save licensors if they don't exercise the control," says White. Owners must be prepared to be more hands-on in their brand management.
Be prepared to be "hands on."
"Brand protection is something you absolutely have to apply yourself," says Gentzel. The entrepreneur needs to realize that he's no longer just the thought leader, he needs to be the person who will make sure that the larger organization is maintaining brand integrity. "You can't go into a situation like this with anything but the expectation that someone is going to have to step up and take on this rather significant role," Gentzel adds.
"There is a whole new wave of technology that is making it a lot easier to manage the creative and intellectual sides," says Gentzel. For instance, his firm has signed up with Cyveillance based in Arlington, Va., to help keep tabs on their clients' licensees. Through Cyveillance, Gentzel can understand how a brand is being abused and used by licensees and in marketplace.
"There also is some new technology related to PDF generators where you can legitimately build a platform that will allow you to standardize creative," he continues. One vendor, Oncall Interactive based in Chicago, Ill., has built a platform for Harley Davidson, from which its dealers can access pictures, copy, logos, and other marketing materials to build their own creative. EMotion based in San Francisco, Calif., also provides brand management services through handling all of company's creative, including digital assets, copy, and headlines, and manages content to the press, too.
"We like these tools, but the reality is there is not substitute for getting on a plane and sitting in on a day at the operations and making sure things are consistent and legitimately maintaining their side of the bargain," Gentzel emphasizes.
It's the control issue that is Lovell's only regret in her licensing arrangements. She wishes she had set up more controls in the beginning that would have better communicated her desire to have licensees adhere to the Coyote Ugly brand. "It's being very clear on control issues as far as roles people play within your own company, making sure that you are the final say, in anything creative or anything new that is coming out of your company, anything that affects brand image."
Find licensees who can embrace your values and beliefs about your company.
What makes your business great? What are you doing that people love? "Your brand is a culmination of the stories you tell and the relationships you build. It's all the things that allow you to be perceived in the marketplace," Gentzel says. Knowing this will help you better communicate and emphasize the importance the brand has to you and the company. Mastering the narrative is key to helping ensure the licensees you choose will maintain your brand's integrity.
"It legitimately goes to 'do I believe that these people understand what makes these customers and this organization tick?' 'Do I believe they can share this synergy with this group?" says Gentzel. "When I understand [my company's] keys to success, I have the ability to look at other markets, and find where there are other customers who can embrace this same idea, and then determine who the best partners might be to take it to market while maintaining what made the company great in the first."
As an entrepreneur who has put his blood, sweat, and tears into the business, it's also about finding people who are going augment the business. "I'm not looking for someone to just go out and sell but I also that person to contribute," Gentzel says. "I need to know that you are bringing value to the table, not only do I want you to be passionate about what I'm providing, I need to know that you are going to augment it," adds Gentzel.
Assuming your passion for the business and its brand will automatically translate into a licensees passion is naive. "What I've realized through all of this is that running a Coyote Ugly for me is easy -- it's second nature," she says. "It's not second nature for other people." Lovell could have 50 Coyotes opened through licensing, but it would have caused the fall of the company. As Lovell puts it, she would have made some money, but her reputation would have been ruined.