Brandar Consulting, LLC

  • Getting 'em to Sign on the Line which is Dotted...

    Welcome to my first post of 2016. I want to return to the theme of closing deals and try to fulfill Alec Baldwin’s famous line from his cameo in Glengarry Glen Ross: “Because only one thing counts in this life: Get them to sign on the line which is dotted!”

    Well you or your licensing agent have done all the hard work: you’ve found a licensee in an attractive product category, you’ve negotiated great business terms, done all your due diligence to qualify your licensee and you have written and negotiated the contract. All that is left is getting your Senior Management to sign on the dotted line of the contract. This is the easy part, right? WRONG. This can be the very hardest part of the licensing process. It’s what puts gray hair on Licensing Agents’ heads. This part of the process is very often taken for granted by Licensing Managers at Corporate Licensors. Most assume that a licensing deal will just sell itself on its face and the process of getting Senior Management sign-off is just a formality.

    Often Brand Licensing Managers/Directors don’t take the time to sell their key management stakeholders on the merits of a new licensing deal. And what results is you and your agent’s worse nightmare; a fully negotiated licensing deal that never gets signed. The reason for this is what I call the “drop in the ocean effect”; the $ value of the royalties your new licensing deal will collect is a mere drop in the corporate ocean, hardly enough to cause a blip on the corporate revenue radar. Very often your management’s response can be: “you are licensing our company’s more valuable asset, our brand, to a no-name company for how much money?!”

    How do you avoid this situation and get your Executive Management committed to your deal. First off, you start the process by talking with your Senior Management long before they need to sign your deal. You explain what it means to license your brand, the partnership you are seeking, and the product category you are targeting. You may want to share the results of your Brand Extension market research showing that customers were very accepting of your brand entering this product category. You should also explain why you are talking to certain business partners. Next check in periodically with your management apprising them of your progress in striking a deal. By the time you get to the point where you are ready to ask for their signature on the contract, your management will hopefully have heard about your deal a few times already.

    When presenting the contract for signature, put the signature page upfront with a short 3-5 page presentation outlining the merits of the deal and the critical points contained in the contract. Your overview should not only focus on the royalties the deal will generate, but also demonstrate how your licensing deal will cause a bigger wave in the corporate ocean through: 1) stretching your brand into a new product category whereby building new brand equity, and 2) creating new brand impressions from the retail distribution and advertising of your prospective licensee. Typically these brand impressions will drive far more value to your brand than the royalties you generate. Figure out a way to quantify the number of brand impressions that will be created and put a monetary value on it. When I ran AT&T’s licensing program, we were able to put a precise monetary value on our licensee brand impressions and they were 15 times more valuable to AT&T than the royalties we generated annually. If you need help modeling your royalty revenue potential, running your Brand Extension market research, calculating the amount of brand impressions a new licensing deal will generate or valuing these brand impressions consider hiring my firm, Brandar Consulting, to assist you.

    The key here is to prove the value of your licensing deal beyond the obvious royalty revenue and also to prove to your management that you’ve written your contract in such a way as to mitigate the brand risk to your firm so the upside deal potential clearly outweighs the downside brand risk. Doing all this will get you that signature on “the line which is dotted” and enable you to “be a closer.”

    Mike Slusar

    Managing Director & Owner

    Brandar Consulting, LLC

    “Helping Brands Reach for The Stars”

    email: mike@brandar.com

    http://www.brandar.com/

    copyright © 2016 Brandar Consulting, LLC All Rights Reserved

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Best Practices in Brand Licensing Blog

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Our Blog is intended to provide Licensors with unique insights about successfully managing a Corporate Brand Licensing Program. It is written from the perspective of someone who managed AT&T's Brand Licensing program for many years and has consulted in the Licensing Industry for the past 5 years.

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