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OWNER'S MANUAL

Have Brand, Will License: 9 Tips to Do It Right

Think you've got a brand with a life of its own? Make these smart moves now.

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You know the cautionary tales.

The creators of Superman, Jerry Siegel and Joe Schuster, sold full ownership and rights to the character for $130. The Beatles sold off 90% ownership of the rights to their likenesses. For years, Dale Earnhardt Jr. didn't own the rights to his own name.

So what should you do if you have the chance to create the next Angry Birds franchise—or narrate the next Honey Badger video—and you want to leverage the value of your brand?

Marty Brochstein is the senior VP of industry relations and information for the International Licensing Industry Merchandisers' Association (LIMA). LIMA is a worldwide trade organization that helps licensors and licensees through education and networking, and promotes ethical and professional standards.

"Our primary goal is to help companies—both property owners and licensees—use licensing as a strategic business tool to profit from intellectual property," Marty says. "Brands, characters, and intellectual property don't just happen. Our goal is to help companies and individuals ensure their hard work is protected—and valued."

Here are Marty's tips for making sure that if anyone is going to profit off your brand, it's you:

Check your emotions.

Licensing and branding are all about emotion. Say you're walking down an aisle and you see Mr. Clean on the shelf. The brand may evoke trust; it may evoke an expectation of performance... but it does evoke some sort of emotion.

Then take a step back and think about your brand in a broader sense. Try hard to understand exactly what you've created and what it could mean in the marketplace. At this point, you might want to enlist the help of an outside expert, such as a licensing agent, whose business is built on understanding the marketplace, analyzing the commercial potential of a character, brand, or design concept, and then using his or her network of contacts to turn concepts into deals. You may be an expert on the creative side, but without the business chops to monetize your creation, it can peter out before it ever sees the light of day.

As a potential licensor, determine what the application of a brand to your product achieves. Where does it fit into the rest of your product assortment? Does it take your product into a new age range? And if you're the licensee, does the brand add something to the product that makes the royalties paid to license that brand worth the investment?

Either way, if a brand doesn't evoke some sort of emotion, it's not a brand. If a brand doesn't create a reaction, it's not a brand.

It's a failure.

Unleash your inner sleuth.

Then go to stores. Check out the shelves. Check websites. See what's out there. You absolutely must know the space your brand will inhabit.

For example, for most retailers the sales floor is a zero-sum game: To get your product on the shelf you have to knock someone else's product off. Getting "shelf space" online is a little easier, but even so many online retailers incur set-up costs, carrying costs, etc. when they add your products.

In modern retailing, potential customers receive so much information so quickly that products simply don't get the opportunity to find an audience the way they once did.

Every retailer needs a compelling reason to believe your character or brand will move merchandise. They're agnostic. They have one goal: Sell.

So you must know the space—and the competition.

Don't overreach.

Never put your brand into a place where it doesn't make any sense—even if you can. (Just because you can doesn't mean you should.)

Always make sure the license and the product are a logical fit on some level. Would you buy Johnny Walker breakfast cereal?

But also keep in mind that one of the beauties of branding is that brands can be defined in many ways. Take Michael Jordan. Imagine someone ran the idea of a Jordan fragrance line by you. You might think, "Wow, when I think of 'basketball players' and 'fragrance' the first thing that comes to mind is a sweaty, smelly locker room... no way."

But Jordan and his people worked hard to define him as a man of style and grace, so a cologne line made some sense since, as a brand, Jordan transcended sweaty locker rooms.

With the right effort and approach, you can make a brand mean anything you want it to mean. Nothing makes Mickey Mouse inherently more lovable or believable than Tommy Hilfiger or the NY Yankee logo... a brand is what you make it.

But make absolutely sure you understand where your brand "lives," especially early on, and then stay disciplined and true to it.

Often you only get one shot.

Let your partners step up.

Your brand is your baby, but you absolutely must see it through the eyes of others. Find people who will ask questions. Find people who will challenge your assumptions. As a creator you should believe in yourself, but it can also be incredibly expensive to not benefit from an outside viewpoint.

Shop, shop, and shop some more until you find the right partners. If you're a brand owner or creator, let your licensees use their expertise. If you partner with a t-shirt manufacturer, let them do what they do best.

And always focus on quality: Shoddy merchandise can destroy an otherwise great brand.

As the owner of the intellectual property you have control because a good licensing agreement includes controls and approvals... but good partners know what works on various types of products.

Be wary, certainly, but be open.

Always protect yourself—first.

If you don't want to spend the money to protect yourself before you know a brand has potential, you'll be leaving yourself open. Always take care of the legal stuff first so other people can't rip you off. Get trademarks and appropriate copyrighting (say, for catchphrases) first.

Why? Later is too late.

If you plan to explore the licensing waters, first protect yourself legally because no one needs to license your intellectual property if you can't show ownership.

Be vigilant...

Protecting your rights requires that you can show you worked to enforce those rights when others infringe. (Unfortunately, there is no "Copyright Police Force.")

If you can't show vigilance, then you may not be able to legally protect your rights.

But be open.

If you create something valuable, you may eventually find someone using your intellectual property in an unauthorized manner. It's important that you assert your legal rights. As a brand owner, if somebody's simply taking your IP and making products out of it without signing a license with you, it's theft, plain and simple. You've got to stop it immediately.

But sometimes, rather than beating them up, it might make sense to try a different approach. Assuming they're creating merchandise that reflects well on your character or brand—and you don't already have an exclusive licensee in the same category—you might say, "You probably weren't aware, but what you are currently doing violates our legal rights. Let's talk about setting up a license agreement, so you can become a legal licensee."

Sometimes people who violate your rights simply don't know they are doing something wrong. Give them a chance; if they don't respond positively, then do what you have to do.

Think ahead...

When Pat Riley was coaching the Lakers, after their second consecutive NBA championship, he trademarked the word "three-peat" for commercial use. While the Lakers did not win a third straight title, in 1993 the Chicago Bulls did, and his company collected royalties from sports apparel makers who licensed the phrase for use on merchandise.

And learn from others.

I love this story. When Kathy Ireland was a young model, she received proposals for a licensed swimsuit line. That certainly made sense since she was a Sports Illustrated swimsuit model.

Instead her first effort in licensing was for socks. Her reasoning went something like this: It would be easy to do a swimsuit line, but if she could put her name on socks and be successful, then she really had something.

The rest is history; her brand is reported to do approximately $2 billion a year in retail sales.

IMAGE: Flickr/JD Hancock
Last updated: Apr 26, 2012

JEFF HADEN learned much of what he knows about business and technology as he worked his way up in the manufacturing industry. Everything else he picks up from ghostwriting books for some of the smartest leaders he knows in business.
@jeff_haden




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