Licensing is a powerful way to bring fresh, unique, and trendy designs to your garment-printing operation. Read on to learn more about this competitive and rewarding market and how it can help your business grow.
By Lori Leaman
With numerous printers competing for a license, you must be willing to negotiate. The licensor might base his or her decision on which printer will pay a higher royalty, will pay a higher minimum-guarantee payment, has the best distribution network, or has the best reputation for delivering high-quality merchandise in a timely manner. Licensors also may consider which printer has the qualifications to become a partner and work with them on a long-term basis.
"There are only so many ways a screen-printing company can differentiate itself, and I think the better companies try to differentiate on quality, creativity, service, how quickly they can deliver the product, and how established they are to be able to meet the needs of a particular retailer," says Scott Bouyack, vice president of apparel marketing for the Collegiate Licensing Company, an Atlanta-based business that manages licensing programs for more than 200 colleges.
Sheridan says Disney picks its licensees very carefully. "We value their expertise in the marketplace, and that is very critical to us. We value quality on our product, and that is paramount. We also believe in a win-win partnership. We believe that when we enter into a partnership, it is a long-term relationship. We want to guide them to make the best product they can because at the end of the day, Disney stands for quality, and Disney is a brand that needs to be represented well in the marketplace."
When you are awarded the rights to reproduce a licensed property, your agreement with the licensor will cover several crucial points. These include licensing fees and royalty payments, minimum guarantee payment, duration of the contract, and what is expected of you as the licensee.
In typical licensed-property agreements, the licensee will pay a licensing fee (royalty) to the property owner. Royalty rates vary from market to market. Riotto explains that in the entertainment market, average range for royalty rates is 8-14% of the wholesale price of the product. In the sports arena, the rates average between 8-11%, and in the collegiate market, the rates range between 6.5-10%. The average range is between 6-10% in both the corporate and celebrity sectors. Some licensed properties, including those in the children's market, fall at the lower end of the range because they often have a limited age demographic.
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