Toy Licensing

Posted on Mon, 12/04/2017 - 17:03 by avantgarde

What is Toy Licensing – basically, this is where the owner of a Brand or Brands wants to generate 3rd party income from their Brands. They might not have the capability or interest in commercialising their Brands in every category, and might choose to ‘License’ the rights to particular product categories to companies focused on those products. These companies can then use the imagery, logos and other assets owned by the Brand holder.

Licensee & Licensor –  The Brand owner, the one who is Licensing their rights out is the Licensor. The company who will commercialise the product is the Licensee.

Commercial Terms – The Licensor gets paid via royalties paid on the Licensee’s sales, royalty rates would typically be c. 8-12% of Licensee’s net sales. The Licensee would normally be required to commit to an M.G. (minimum guarantee), which is a minimum amount they will pay the Licensor for the rights, regardless of whether they sell anything or not. The M.G. is normally split into an initial ‘Advance’, and subsequent installments over the period of the term of the license. The Licensee does not pay any additional royalties until they’ve sold enough to cover the M.G.

How the process works?

Every property is different and for a licensing programme to succeed it needs to be carefully thought out. At The Copyright Promotions Licensing Group a marketing plan is put together for each character taking a number of things into consideration:

-The anticipated lifespan of the programme
-The programme’s core target audience
-The appropriate distribution channels for product- will it retail through department stores, independents or both? What about catalogues?
-The merchandising strategy- what other product categories is the character is licensed to?
What is the timing on any planned media support?
Once the direction of the programme has been finalised the property can be presented to licensees.