Brandar Consulting, LLC

  • Why Good Brand Licensors Sleep at Night – Part 2

    I just returned from the International Licensing Expo in Las Vegas. While I was there, I was able to participate in Licensing University and run some seminars; one of which was Best Practices in Corporate Trademark Licensing. I met a fair amount of people who are new to brand licensing at the show and it was clear to me that this blog post: Why Good Brand Licensors Sleep at Night – Part 2 is long overdue for many. In my last post I spoke about the organizational structure of your Licensing Function being absolutely critical to your overall long term licensing success. Well in Part 2, I am cutting to the chase. You want to know the main reason I slept at night when I ran AT&T’s brand licensing program for ten years? I had outstanding Legal support and a world class Quality Assurance Function. To me, that is where the rubber meets the road in successful brand licensing functions. It was no accident that I had great support in these two areas because I went out to find, lobby and recruit that support.

    My main legal support was Frank Politano, AT&T’s Senior Trademark Counsel. I really did not know just how skilled Frank was at brand licensing until I sought him out to see if he could support the proactive expansion of our Brand Licensing function. You see at times Trademark Lawyers may not have a lot of experience in actually doing Trademark Licensing. In Frank’s case, he was a tremendous resource for me as he had so much experience he has actually co-authored a book on the topic for Aspen Law: Drafting License Agreements, now in its Fourth Edition. I also negotiated supplementary legal support from my licensing agency as well. It was up to Frank to manage and utilize those additional resources. He did this quite often. I cannot stress enough the value of having a great Trademark Legal team to insure your contracts are drafted in such a way as to fully protect you as the licensor. Fortunately for me, Frank actually left AT&T and is now available for hire to all in the licensing industry at K&L Gates.

    The other critical aspect to my being able to sleep at night when I ran AT&T’s licensing function was having a world class Quality Assurance function. Because of the nature of our program, we did a lot of licensing in the consumer electronics category. My first thought was to see if I could find a resource internally at AT&T Labs that could perform this type of Quality Assurance. I was lucky enough to find some Electrical Engineers who had spent 20 years designing and doing quality assurance for AT&T branded phones and cell phones. They were more than eager to help me. They were trained as ISO auditors and in Six Sigma Quality processes. I was able to pay them an annual fee to do all my quality assurance. Eventually, AT&T laid them off so they formed Quality Assurance Management Inc. www.pqam.com . The company is run by Jeff Lumpkin. Jeff has a passion for Quality Assurance. This blog post is really the brain child of Jeff as he used to introduce himself as “the reason I sleep at night”. He used to say that he didn’t sleep at night so I could. At the end of the day, Quality Assurance is the bedrock of any long-term successful Brand Licensing Program. Poor product quality has ended many licensing relationships prematurely and indeed, ends many Corporate Brand Licensing programs abruptly as well. So if you are building a brand licensing function, take the time to find extremely qualified Quality Assurance resources. Ideally, you want professionals who are trained in ISO and Six Sigma compliance, have a passion for product quality and have an engineering or quality testing background.

    When people ask me the key to successful Brand Licensing Programs, I tell them its making sure you secure and utilize strong legal support and quality assurance functions from your program’s very start. Why? So you can Sleep at Night!

    Mike Slusar

    Managing Director & Owner

    Brandar Consulting, LLC

    email: mike@brandar.com

    “Helping Brands Reach for The Stars”

    http://www.brandar.com/

    copyright © 2010 Brandar Consulting, LLC All Rights Reserved

    Read more...

    0 comments

  • Why Good Brand Licensors Sleep at Night – Part 1

    I know from my many years of running AT&T’s brand licensing program that it can be tough to learn to live with the risk that is associated with licensing your company’s most valuable asset; its brand. While I was licensing AT&T’s brand to other firms to use on their product or service, I had to live with the fact that if my licensee screwed up, AT&T’s brand could be severely damaged in the marketplace. And that damage could be very visible to my senior management. I always lived under the mantra that I was one bad licensing deal away from ending AT&T’s brand licensing program. The reason I made this connection was because I knew that the royalty revenue I could earn AT&T from my licensing program paled in comparison to the monetary damage one of my licensees could do to the AT&T brand. You see royalty revenue is usually a drop in the corporate ocean of revenue and with AT&T generating $123 Billion in Revenue annually, my tiny royalty stream was less then a drop, it was a molecule. Hence, if any of my deals ended extremely badly, it would probably mean the cancellation of my licensing program entirely and the end of my career at AT&T. While I was running AT&T’s program, one of my contemporaries at a competitive company met this fate when the wife of the CEO of that firm noticed one of their licensed products in a close-out bargain bin at a Consumer Electronics retailer. She bought the product and shared the story and the product with her husband. It was the end of the brand licensing program at that firm and the end of that Brand Licensing Director’s job.

    So that begs the question, why did I assume the Director of Licensing role at AT&T and bare that level of risk. The simple answer is that brand licensing done well can be tremendously successful, rewarding personally and value-added for your company both in terms of brand building and revenue generation. The problem is that it takes tremendous vigilance and hard work to do brand licensing really well. And far more deals fail then succeed. The key is working hard to build a licensing organization around you that is filled with extremely talented people all working toward the common goals of: 1) attracting only the best licensees to your brand, 2) choosing the right categories to enter into, 3) doing extremely thorough due diligence to choose the “right” licensee, 4) negotiating a thorough contract and 5) proactively managing & partnering with your licensee to insure their marketplace success. If you do all these things well, you sleep well at night. BUT you must surround yourself with the right team to make that happen. This is not to say your team always sleeps well at night. ;-) There are always going to be issues to manage, but if you pool the risk of brand licensing around a talented licensing group, everyone is better able to manage that risk appropriately and succeed. The key is how you build that organization.

    More on that next time in Part 2 of this thread.

    Mike Slusar

    Managing Director & Owner

    Brandar Consulting, LLC

    email: mike@brandar.com

    “Helping Brands Reach for The Stars”

    http://www.brandar.com/

    copyright © 2010 Brandar Consulting, LLC All Rights Reserved

    Posted by Mike Slusar - Brandar Consulting, LLC

    Read more...

    0 comments

  • Choosing the RIGHT Licensing Agency

    My lost blog post dealt with how to sell the use of a brand licensing agency into your company. This blog post will deal with how you choose the right licensing agency to bring to your senior management for approval.

    The process for choosing the right agency for your Corporate Brand Licensing Program is very similar to the very reasons that justify hiring a licensing agency at all. You hire a licensing agency for: 1) their experience in the categories you want to enter, 2) their strong network of manufacturers in those categories, 3) their ability to negotiate lucrative licensing deals in the past in those categories and finally 4) their track record of long term success.

    As you evaluate licensing agencies, you want to do your due diligence in each of these 4 areas:

    1) Their experience in the categories you want to enter

    You really want to find an agency that has staff that has worked in the categories you are looking to license into. If your brand’s equity is fashion-based, you may want to find an agency that has shown success in soft goods, furniture, jewelry and fragrances. If you brand is food-based, you may want an agency who has expertise in licensing food categories and household goods. Perhaps your brand is a kids-based entertainment property, well then you would want to find an agency who has a good track record for success in the toy and gaming category. Or maybe your brand is a technology brand, you may want to look at an agency who has shown great success in licensing in the consumer electronics category.

    A critical note of caution here. While you want an agency with experience in the categories you want to enter, you need to make sure that they are not already under contract with a brand that would be a direct head-to-head competitor with your brand across many categories as this would be unmanageable conflict of interest.

    2) Their strong network of manufacturers in those categories

    As part of your agency due diligence, you need to get an understanding of the strength of your agencies network in the categories you may want to enter. They may or may not have current deals going on with their network, but you will want to understand where their network is and how strong it is. Most agents probably won’t tell you the names of the licensees and manufacturers they work with until after you have hired them. But if you are a good sleuth, you may be able to piece things together from current deals they have and past deals they have done over the years as there will likely be a track record of PR around those deals.

    3) Their ability to negotiate lucrative licensing deals in the past in those categories

    This is where the rubber meets the road. While you want your licensing program to be first and foremost, a brand building exercise, you will be judged by how financially successful your program is. You are hiring an agent to be your sales force to bring in new licensing deals. You want to find an agent who has a track record of negotiating larger, financially successful licensing deals. When I ran AT&T’s program, I used to always say it took me the same amount of time to prospect, close and manage a 6-figure deal as it took me to do a 7-or 8- figure deal. Why would I want to spend my fixed amount of time on 6-figure deals. You need an agency that understands this and can deliver you the larger deals relative to your brand’s potential.

    4) Their track record of long term success.

    This is last in the pecking order because it is the order that I think you should attack your agency due diligence. It is the MOST important criteria for you to evaluate. You want to see that the agency you are looking at has a lot of long term clients. You want to see licensing deals that have lasted many years. You also want to see a lot of long-tenured employees. You want to ask the agency, precisely what personnel will be working on your account, what are their backgrounds in the industry and how long have they been with the agency. You a paying an agency to have seasoned employees with relevant backgrounds working on your account at the most junior levels. Very often agents are hired because of the strength of their senior leadership team during their sales pitch, but the reality is that you may only get a small fraction of senior leadership time working on your account. That’s OK if the agency’s junior managers have a strong track record of industry success. It’s also important to find out during due diligence just how much time will be devoted by all levels of agency management to your account. Long term success means an agent who: is able to find deals that last, has good people in their agency nurturing relationships with both licensors and licensees, retains valuable employees and retains valuable clients.

    You may be asking yourself how in the world do I find all this information out about an agency during the due diligence process. Ask for references. And make sure to get references from both current and former clients. You may find this surprising, but a good agent will easily have former satisfied clients to use as references, companies where the agent grew and established their programs to a point where the client grew out of the need for an agency. You also want to make sure you get references from both current and former licensees as well. Lastly, you can hire an industry consultant, like myself, who has a great handle on the agents that are out there, what they are good at and which one might be the best fit for your licensing program.

    I hope you have found my insights helpful here. I leave you with this applicable anecdote. In Indiana Jones & The Last Crusade, the culmination scene has Indy choosing the Holy Grail from a sea of chalices in all shapes and colors in an ancient temple. Before choosing, the Immortal Knight Templar guarding the Grail for centuries warns Indy, “But choose wisely, for while the true Grail will bring you life, the false Grail will take it from you.” The same goes here. Choose wisely, as an agency that is a good fit will breathe life into and grow your brand, while a bad fit could harm your brand and cripple your licensing program for years to come.

    My next post will look at how to structure your licensing organization for success.

    Mike Slusar

    Managing Director & Owner

    Brandar Consulting, LLC

    email: mike@brandar.com

    “Helping Brands Reach for The Stars”

    http://www.brandar.com/

    copyright © 2013 Brandar Consulting, LLC All Rights Reserved

    Posted by Mike Slusar - Brandar Consulting, LLC at 10:28 AM No comments:

    Email ThisBlogThis!Share to TwitterShare to Facebook

    Read more...

    0 comments

  • Selling a Licensing Agency In for Your Corporate Brand Licensing Program

    My last blog post dealt with the lack of adequate resources being one of the major impediments to building a successful Brand Licensing Program. At the end of that post, I talked about one of the best ways to supplement the resources of your Corporate Licensing Function is to research and hire a good brand licensing agency. The process of finding the right agency and compensating them at a fair rate can be the topic of my next blog post. This post will deal with how you sell hiring an agency to your Senior Management once you think you have found an agent that meets your needs at the right price.

    My experience running AT&T’s licensing program for a number of years taught me that you must sell your Agency to Senior Management for that model to be a success over the long term. Each time a new Chief Marketing Officer came in, I had to bid out and resell the merits of using a licensing agency as part of my licensing program. The cold reality is that many Senior Managers in Corporations view the use of an Agent as a cop-out by the Licensing Director. In their minds, farming out the License Prospecting Function to an outside group is handing over a responsibility that the Licensing Director should be doing on their own. This gets compounded when Senior Management sees the size of the agent commission. They view the commission as giving the company’s money away. Opposition can be strong and once you sell your agent in, the process never ends. You must constantly continue demonstrating their worth to Senior Management.

    So what are the best ways to sell having an agent for your Corporate Licensing program. First it is important that you work together with your chosen agent on their Sales presentation making sure it is customized to your industry and has examples in it that you know your Senior Management can relate well too. If you have chosen your Agent wisely, they should have a lot of examples of prior success that fall in or close to your industry. At the same time, it is very important that you document just how much time and equivalent headcount it would take internally to perform the role that your agent would fill. As I explained in my last post, it is very likely that your company will give you no where near the headcount you need to build a successful Licensee Sales function. Licensee Sales is the most time consuming function in your licensing program. What results from your under-resourced function is a Licensing Program that flounders; growing very slowly and certainly not at a level Senior Management expects. Use the Agent’s presentation to Senior Management to demonstrate the size and power of the Agent’s network and the value to be exacted by putting that network to work for your company!

    Make sure that you bring your prospective Agent in for a meeting when all the key Senior Management stakeholders are available. If an important stakeholder cancels, re-schedule the meeting. Also I always found it best to allow time for Senior Management to get to know the key players from the Licensing Agency on a personal level. So if at all possible, see if you can schedule a lunch or a dinner around the meeting, even if the lunch is sandwiches brought into a meeting room. Hitting it off on a personal level with Senior Management is one of the best selling tools there is. I always wanted my Senior Management and my Agent to feel like they had built a relationship in that very first meeting. And I wanted that relationship to lead to talking to each other directly down the road without my presence or facilitation. I never felt threatened by my Agent and my CMO having direct conversations; to the contrary, I actually felt better about my position in our organization because my management would dial up my agent at any time to ask them a question. It gave my Senior Management more of a stake in my success and I felt like I created a new resource for them to tap.

    The final critical area you will need to tackle will be paying the agent’s commission. This is not a topic that your Agent should deal with in their presentation. You should address this with your Senior Management yourself after the meeting. Make sure you have done your homework and gathered benchmarking data on standard agent commissions. Try to demonstrate how the commission structure you negotiated with this agent is unique and slightly below the average. The going rate for most corporate licensing programs is 35% of the net royalty stream. This commission rate is for a full service agency; by this I mean an agent that does license program planning, licensee prospecting, due diligence, deal negotiations, contract drafting, contract administration, royalty administration and assists with marketing & product approvals as well as ongoing quality control. You can get lower commission rates for less services from your agent. I don’t recommend this approach and a good agent won’t like it either. You see a good agent will recognize that your success is their success. They only get paid if a license turns out to be successful. A good agent will want an involved role in insuring success. Lower commission rates can also be had for more established or promising brands where the agent sees a large upside. I digress though. The main thing you need to sell your Management on in terms of paying a commission is that they are paying a commission on NEW revenues. Yes a good agent should be able to find and close deals that you could not get or negotiate on your own. So getting 65% of new revenues is better than getting 100% of no revenue at all. The other point to make to your Management is that a 65% margin is likely to be a much higher margin than the standard margin for the core business of your company. Even with these points their may still be reticence in your Management to bring the agent on board to represent your WHOLE licensing business. When this hurdle came up with my own AT&T program, I was able to convince my agent that we would assign them certain product categories to work each year. Once AT&T assigned them a category it was theirs to work for the year. If we then received inquiries directly at AT&T about that category, we passed them to our agent to work. In this fashion, we were able to keep certain categories which were extremely close to our core equity for ourselves as they were easier to do licensing deals on and receive 100% compensation; my Management felt this was a more equitable approach.

    Hope this helps. Next time we will look at how to find the right agent for your corporate licensing program. And after that I will turn to how to staff a licensing function for success.

    Mike Slusar

    Managing Director & Owner

    Brandar Consulting, LLC

    email: mike@brandar.com

    908-735-4115

    “Helping Brands Reach for The Stars”

    copyright © 2013 Brandar Consulting, LLC All Rights Reserved

    Read more...

    0 comments

  • What's one of the Biggest Hurdles to building a Successful Licensing Program

    What's often the biggest barrier to success in terms of starting up or expanding a Brand Licensing Program? This is a common question that I get asked a lot as a consultant in the industry. I will tell you, more often then not, it is trying to build a brand licensing program without receiving adequate resources from your company to do the job right. Typically a Licensing function in a corporation might be staffed by a Director of Licensing and maybe one support person if you are lucky. What will come along with that title is probably an aggressive royalty revenue target that you will need to achieve in your first year. Unfortunately, most licensing functions are borne out of a desire to generate additional revenues from you brand, but there is very little forethought or research that goes into staffing a successful licensing function to achieve such a goal. Very often the company setting up the function may be under headcount growth restrictions particularly for non-core activities like brand licensing. I would say the norm in the industry is that a company NEVER will give its licensing function the resources it really needs to be successful.

    There also can be a chicken or the egg mentality in that management will tell you that you can have more resources once you close a few successful deals and start generating a profitable revenue stream. The problem is getting those first few licensing deals closed can be the hardest part of starting a licensing program. Often programs will languish for a year or two as one or two licensing professionals try to act as their own sales force in scouting out new licensing deals. But serving as your own sales force is more than a full time job for a Director of Licensing whose responsibilities also include legacy licensee management, licensed product quality control, cross marketing between licensees and internal business units, marketing approvals and meeting with retailers to help get licensed product wider distribution. Trying to cover new License Sales on a part-time basis is simply a recipe for very slow program development.

    So what's a Corporate Licensing Director to do? My advice is to quickly tee up the analysis and discussion of what resources your licensing function truly needs to achieve its goals. If your company is unwilling or constrained from providing these resources, then it is time to consider hiring a licensing agent. Licensing Agencies can serve as your outsourced sales force, aid in licensee background due diligence, negotiate your licensing deals and assist in contract drafting. Once a deal a signed an agent can also be helpful in on-boarding your new licensee and assisting in executing on the promise of the new licensing relationship. Remember their compensation is commission based so the new licensee’s success is their success. Their interests are perfectly aligned. To me a good licensing agent can be the biggest key to success for a new licensing program.

    At times, licensors have to arrive at this conclusion the hard way, they try to go-it-alone without the proper resources, experience or the network to be a successful licensor and their program will languish for a few years with very poor results. Fed up with the lackluster performance Management finally will bite the bullet and decide it can now stomach paying an agent their commission rate in return for getting the licensing program on a much faster track for success. Unfortunately, by that point they have lost time, licensing opportunities and years of royalty revenues. The reticence to bring an agent on-board quickly in the early stages of a licensing program because of the "dreaded' commission payment is the biggest hurdle to building a successful licensing program with limited resources. When I encounter this "commission" reticence, I ask my clients this simple question, which is better getting 70% of millions of dollars in agent generated royalties or getting 100% of the zero dollars or much lower royalties revenues that you may be able to generate on your own. The healthiest way to look at agents is that a good agent will typically generate royalty revenue that you would not be able to attract on your own; truly incremental revenue. I’ll pay a commission on revenue incremental to my own licensing efforts every time.

    My next post will deal with successfully selling a licensing agent into senior management.

    copyright © 2013 Brandar Consulting, LLC All Rights Reserved

    Mike Slusar

    Managing Director & Owner

    Brandar Consulting, LLC

    “Helping Brands Reach for The Stars”

    email: mike@brandar.com

    http://www.brandar.com/

    Read more...

    0 comments

Best Practices in Brand Licensing Blog

Welcome to our Blog

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.

Strategy & Execution Consulting that Delivers Results

Let us Help Your Brand Reach For the Stars

   mike@brandar.com

  908-735-4115

Visit Us on Google+

Photo crop (passport)

You are viewing the text version of this site.

To view the full version please install the Adobe Flash Player and ensure your web browser has JavaScript enabled.

Need help? check the requirements page.


Get Flash Player