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
In many programs, the royalty payment includes a minimum guarantee or advance, which can range from a few hundred to a few thousand dollars, depending on the market and the client. In effect, the licensee is guaranteed to pay a minimum fee to the licensor. Riotto explains that the minimum guarantee is established for two reasons: It serves as a motivating factor for the licensee to market and actively sell the licensed product, and it protects the licensor in situations where the licensee is not able to manufacture the property after all or does not aggressively sell the product. In most cases, all or some of the minimum guarantee is paid when the agreement is signed.
Contracts generally cover a period of one to three years, with most contracts falling in the two- to three-year range. Contract length typically depends on the strength of the brand and the length of time it has been in the marketplace. Contract length also may be determined, especially in the fashion and film markets, by the length of time the product remains in the marketplace.
Contracts also may include what are called price points. For example, one screen printer might hold licensing rights for T-shirts sold up to $25 at retail. Another screen printer might have a license for that same property but at a higher price point, meaning that the T-shirts are sold in a more upscale or specialized store.
Whatever the scenario or contract agreement, the image, logo, character, or artwork being printed is the most critical element in the licensing contract. Licensors typically do not allow printers to take liberties with the licensed property. Most licensors provide a style guide that the printer must use. In some instances, particularly in the collegiate-apparel market, a licensor will invite a printer to submit designs. In all cases, the design requires final approval from the licensor. This process can take anywhere from a couple of weeks to several months, depending on the licensor's approval process and how quickly the products need to hit the marketplace.
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