Is your business a franchise, or are you thinking of turning your business into a franchise?
Are you planning to expand your business into other regions or new markets?
Are your products re-sold by other businesses (e.g., software pre-installed on others' hardware)?
These are some scenarios in which businesses should be thinking about licensing their trademarks, brands, logos, and/or slogans.
Licensing can open new doors and benefit your business, if done correctly! Advantages of licensing include increasing revenue, broadening your market presence, and forming strategic partnerships. If you think that licensing could be a good opportunity for your business, read on for some guidance and helpful tips!
Who Should License and Why?
Licensing can be a valuable tool for various types of businesses. Here are a few examples of companies that use brand licensing strategies and how these strategies are beneficial:
- Companies that want to expand into other regions or
markets:
Licensing can be an effective method for businesses aiming to grow their presence in new geographical markets or to reach customers in new markets. It allows you to enter new regions or markets without the complexities and costs of setting up new operations or creating new products yourself.
Example: Mr. Clean® is a well-known brand owned by Proctor & Gamble (P&G). The Mr. Clean® brand began with a household cleaning product in the late 1950's and early 1960's. Given the success and popularity of the original Mr. Clean® product, P&G has benefitted from expansion into related product categories by licensing the Mr. Clean® brand. For example, the Mr. Clean® brand is licensed to Butler Home Products LLC for use with various cleaning tools, such as mops, gloves, sponges, cloths, and toilet scrubbers. P&G's expansion into cleaning tools through Mr. Clean® brand licensing to Butler Home Products LLC has undoubtedly been a win for both companies!
- Franchise Owners:
Franchising is a business model where a franchisor grants the franchisee the right to operate a business using the franchisor's trademark, business model, and operational systems. It is a business strategy that leverages the brand's reputation and operational model to grow more efficiently while still maintaining company standards.
Example: Mary Brown's Chicken, originally from Newfoundland and Labrador, has hundreds of locations across Canada based on its franchise model. To preserve their brand's reputation, they have a robust training protocol for all franchisees operating under the Mary Brown's Chicken brand that includes classroom sessions and on-site guidance. These standards and protocols along with any other franchise conditions are primarily enforced with robust licensing agreements.
When Should you License?
Whenever you want! However, ensure that you have researched and prepared for market entry and secured the necessary legal protections and partnerships to support your licensing strategy effectively.
Licensing Tips
Whether you're looking to license your brand in Canada or internationally, here are three tips to consider:
1. Be Vigilant
As a brand owner, controlling how your trademarks, logos, slogans, domain names, social media handles, and promotional materials are used for the goods and services offered by a licensee is crucial. Ensure that the quality of the goods and services provided by those licensing your brand aligns with your company's standards.
Neglecting to maintain proper control over your brand could lead to your company developing a poor reputation or even losing its trademark rights.
2. Exercise Public Transparency
Transparency is key when entering into licensing agreements. The licensee should be required to publicly acknowledge the trademark's licensed status. This allows the brand owner to continue to assert authority over the brand and build consumer trust.
Transparency helps preserve your brand's uniqueness. Over time, consumers will understand the connection between your brand and the products or services offered.
3. Document Everything
A written agreement provides clarity and legal protection. Consistent and reliable documentation can help you enforce your brand's standards and protect your brand's reputation.
Written agreements are helpful in maintaining your trademark rights and in potential legal disputes, as agreements clearly define the terms and conditions of the licensing arrangement.
What if you are Licensing Outside of Canada?
Some things to consider if licensing internationally:
- Domain Names: Policies around domain name
registration vary from country to country. Some countries require
residency or citizenship, proof of trademark ownership, or have
various unique privacy and data management rules. You should be
informed about these regulations when attempting to register a
domain name in another jurisdiction.
- Tax and Financial Implications: Remember that different countries have different rules regarding earned income. Consult with tax advisors from any countries where you hope to license your trademark if you have any questions about the financial implications of licensing.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.