The Licensing Game

[Kak]

Hi Vigilante,

I have a heap of questions to ask you surrounding the licensing subject, what's legal and not, etc. Not sure if I want to bombard the thread with them. Is there any way I can get those to you...looks like the PM option is disabled on your end.

Thanks!

I can imagine there is a reason for the PMs being turned off...

 

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[AllenCrawley]

Is there any way I can get those to you...looks like the PM option is disabled on your end.

Ah, now you know why it's disabled.

 

[ddzc]

It's cool that you have a heap of questions about this. It would be much better for the benefit of the forum if you would post them here and Vig could answer them publicly if he chooses to. This helps us all learn from each other.

I just wanted to make sure b/c even though it's on licensing, it gets a tad off topic but still relevant to licensing in general. Let me compile the list.

Thanks for the positive response

 

[jon.a]

I just wanted to make sure b/c even though it's on licensing, it gets a tad off topic but still relevant to licensing in general. Let me compile the list.

Thanks for the positive response

Just start your own thread with your questions

 

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[Thrillionaire]

Vigilante, in this article you said, "I would be happy to field any questions about licensing that I can." May I please get into correspondence with you?

 

[Djinn91]

really valuable stuff in here vig!!

 

[QLADisciple]

If the royalty is only 5-15%... it seems mad to build your own brand when you can leverage another brand to the max and make sales much faster. However, would you say there's a lot of luck in this? I can't believe that get 'ur done button idea worked... but good on her! So what if I went to an energy drink company and pitched an energy bar for their brand? Or maybe a food brand that I could build a drinks brand around?

P.S. Would they happily market your new product to their own lists to generate sales fast, or expect you to go on your own with no work or contribution on their part?

 

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[TedM]

If the royalty is only 5-15%... it seems mad to build your own brand when you can leverage another brand to the max and make sales much faster. However, would you say there's a lot of luck in this? I can't believe that get 'ur done button idea worked... but good on her! So what if I went to an energy drink company and pitched an energy bar for their brand? Or maybe a food brand that I could build a drinks brand around?

P.S. Would they happily market your new product to their own lists to generate sales fast, or expect you to go on your own with no work or contribution on their part?

The answer is - go try it. Also, read this thread www.thefastlaneforum.com/community/threads/one-simple-idea-stephen-key.30946 - and the book.

 

[TedM]

@Vigilante - I'm more and more leaning to licensing out a product i've put a patent app on - instead of going the route that @Eskil is taking with his product. (and curious about what @zen******* would say too)

The question I have is: how much money - if any - do I leave on the table by going straight to licensing before working to establish my product by myself?

I mean, I would think that one of the great advantages of licensing is - that the company to which I license is an expert in the phases that I am not, and of course would instantly have the ability to scale.

In my case, if I developed a new kind of pencil - a pencil company should be able to see the advantage and decide if there is a market.... or not. Why should I work to build my own pencil company...when I'd rather go on to the other ideas I have, instead of investing 2 years of my life in building up a brand/product of my own...

To rephrase my question:

What is the downside to licensing that I am not seeing ? (Having read & thought about @StephenKey 's "One Simple Idea" - I'm still not sure what direction to take. His next book is due to arrive any day now, maybe that will help?)

I'd love for you all to tell me - I'm seeing things correctly. But - let's see!

 

[DeletedUser2]

love it.
Do it.

Z

 

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[TedM]

love it.
Do it.

Thanks, Champ!

 

[Vigilante]

It's impossible to say. For some, the licensing route yielding perpetual revenues in a completely passive way is fantastic. For others, the potential to retain ownership of a physical product and bring it to market yields different results. I have done both, and made money on both. There is no set formula from which I can answer the question. It is a far cheaper route to come up with a concept, protect it, and then license it.

 

[DeletedUser2]

It is a far cheaper route to come up with a concept, protect it, and then license it.

This is what you could do times 10x.
passive incomes.

After this current venture, I would love to come up with a think tank that does nothing but this, on a regular basis.

maybe I can get dave to come play with me on that
Z

 

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[TedM]

It is a far cheaper route to come up with a concept, protect it, and then license it.

This is what you could do times 10x.
passive incomes.

Right. And the approach to licensing is more easily repeatable, in addition to taking far far less time and attention per product.

Thank you both - you've confirmed my inner hesitation about going the mfg. & mkt. route.

I set an appointment with Stephen Key's inventRight Co-Founder Andrew Krauss for next Monday. Their coaching is $1,500, which - in addition to the materials - includes "unlimited" phone support for a year. Sounds like it's well worth the expense - to have an expert at my beck and call.

 

[Vigilante]

My daughter, fresh out of college, just completed her first license deal and it has the potential to be a blockbuster.

Granted, she had a great coach in her corner.

There's nothing that she did that is not contained within the four corners of this thread.

She's 22, straight out of school, and signed a national license deal. Her products will be shipping in September.

I didn't post this to brag about her --- she's not on the forum.

I posted this for you. If she can do it, using the information contained within this thread, you can do it.

 

[Vigilante]

Here's a Stephen Keys type approach to taking your idea, and getting your idea licensed, manufactured, and on to store shelves.

Why Licensing is the Best Way to Get Your Product on Store Shelves

http://www.entrepreneur.com/article/230557

 

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[Vigilante]

http://upstart.bizjournals.com/comp...-dynasty-now-a-400m-merchandise.html?page=all
Duck Dynasty a $400M merchandise brand as adults clamor for TV toys

 

[Vigilante]

http://www.brandchannel.com/home/post/140720-Sharknado-2-Licensing.aspx

Sharknado 2 Unleashes a Storm of Licensed Merchandise

 

[Vigilante]

http://www.accessoriesmagazine.com/98429/licensing-sales-grow-third-year-row#

Licensing Sales Grow for Third Year in a Row

Sales of licensed products continued their upward trajectory in 2013 for the third straight year, resulting in an estimated $5.655 billion in royalty revenue in the United States and Canada, translating to $115.75 billion in retail sales, an increase of 3.3% and 3.25%, respectively, above 2012 levels, according to theInternational Licensing Industry Merchandisers’ Association‘s (LIMA) Annual Licensing Industry Survey.

 

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[Vigilante]

http://www.sochi2014.com/en/news-sochi-2014-marketing-and-licensing-program-sets-first-records

Sochi 2014 Marketing and Licensing Program Sets First Records

 

[KLaw]

Right. And the approach to licensing is more easily repeatable, in addition to taking far far less time and attention per product.

Thank you both - you've confirmed my inner hesitation about going the mfg. & mkt. route.

I set an appointment with Stephen Key's inventRight Co-Founder Andrew Krauss for next Monday. Their coaching is $1,500, which - in addition to the materials - includes "unlimited" phone support for a year. Sounds like it's well worth the expense - to have an expert at my beck and call.

@TedM did you sign up / attend the InventRight program? Was it worth it? Thanks for the feedback.

 

[CarrieW]

♥ this thread. Love it. Ty
Can't rep + on my phone lol I will getcha shortly vig

 

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[Joe Cassandra]

Because the offer is very early in the cycle, I assume two things :

1. someone sees tremendous upside in what she has and
2. the offer will probably come in extremely low

The guys that want to buy her out have done this before.

Did she end up still not selling very many [as she did end up getting a buyout]? Or did the sales pick up and she closed the deal?

It's funny because most people would look at the button product as "stupid, impossible to sell many etc." and yet she was still able to make money off of it. I probably would've been one of the friends calling the idea dumb and to try something different.

Makes me wonder how many "dumb" ideas I think of and forget immediately that could potentially have license potential

 

[TedM]

@TedM did you sign up / attend the InventRight program? Was it worth it? Thanks for the feedback.

I did, and it will be. My first PPA is filed - 3 companies are looking at my first (modest) idea - 2 others said no, and another 25 on the list to contact.

Here's my thread on it...
https://www.thefastlaneforum.com/community/threads/starting-with-patents-licensing.51309/

As Vig. said - you don't need it - but i find it really helps. they're very available and will shepherd you through each stage of the process.

 

[Vigilante]

Did she end up still not selling very many [as she did end up getting a buyout]? Or did the sales pick up and she closed the deal?

It's funny because most people would look at the button product as "stupid, impossible to sell many etc." and yet she was still able to make money off of it. I probably would've been one of the friends calling the idea dumb and to try something different.

Makes me wonder how many "dumb" ideas I think of and forget immediately that could potentially have license potential

She got bought out by a third-party. Her total investment was only a few thousand dollars maximum. Someone purchased her idea and her license agreement contract and existing inventory for enough to make her happy. Not enough for her to retire on, but certainly more than she makes annually.

 

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[funkj25]

Vig, do you typically recommend your clients have a prototype ready to show licensors before making the call? Or do you worry about prototyping after the call is already made?

In the process of gathering info, contact numbers, manufacturing stuff, etc. to make a call about this. (So big thanks for the thread). Just curious if there's a good rule of thumb or if it's a "it depends" situation.

 

[Vigilante]

We've done it both ways. The most recent one (that my daughter did) she had a half of dozen prototype samples. In the one that started this thread… The license call was made based purely on an idea without a physical sample in hand. In that case we knew where and how to get the samples once the license deal started moving forward. Keep in mind that final working samples will always be a requirement before a licensed deal is Inked. So, if you make the call and they like what you have to say… The next step would be submitting some samples. If you can get the samples quickly, that's fine. If you make the call but have no idea how you'll produce the samples if they ask for them… That might be a problem. You want to come off as an expert in the arena that you're doing the license agreement for.

When we did the Dale Earnhardt Junior NASCAR GPS license, we were already manufacturing GPS units so it was simply a function of branding and content.

Make sure you are knowledgeable enough about the supply side so that if questions come up about your ability to supply during the license discussion, you have all of the answers.

 

[funkj25]

Good deal. I appreciate the thorough response. Originally I was thinking hey I'll just call the VP of licensing up and see if they're interested. However, being small I took a step back and thought I need to get all my ducks in a row, then a pattern, then flying in an echelon formation with ammo ready. What I'm working on is small peanuts for your deals, but would be a boon for me if I can pull it off.

In short its a collectible, would be a hand-crafted limited edition run made here in the U.S. I know how to get it done, have plenty of master craftsmen/artists friends to call in for support if need be, just wasn't sure which step to take first. So I'll proceed with putting together a prototype so if they like the idea I can ship them a model to look at in person immediately which is my estimate of what would happen. It's "only" about a million in revenue to consumer deal tops (may be less, depends on run size and final retail price). This company has done somewhat similarly structured deals in the past and presently, but with those licensees they also have multiple runs of different models so we'll see whether I'm big time enough for them.

Worst that will happen is they say no. Upside is huge for me, downside is very minimal. Time to get to work.

 

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[Vigilante]

Nothing is small peanuts when you take an idea of your own, bring it from concept to reality, and sell it. I have done deals from small to large and the only difference is the number of 000,000's involved. Core strategy is the same. Good luck. I can't wait to read your progress thread.

 

[TedM]

Keep in mind that final working samples will always be a requirement before a licensed deal is Inked.

Why do you say this? If you are licensing to a manufacturer - who has the retail distribution in place already - as long as they understand the technology, would they really need a working sample? Let's say your invention is based on injection molding - and their core lines are based on injection molded products. They should be able to evaluate the manufacturability better than you.