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Licensing means renting or leasing of an intangible asset. It is a process of creating and managing contracts between the owner of a
brand A brand is a name, term, design, symbol or any other feature that distinguishes one seller's good or service from those of other sellers. Brands are used in business, marketing, and advertising for recognition and, importantly, to create an ...
and a company or individual who wants to use the brand in association with a product, for an agreed period of time, within an agreed territory. Licensing is used by brand owners to extend a
trademark A trademark (also written trade mark or trade-mark) is a type of intellectual property consisting of a recognizable sign, design, or expression that identifies products or services from a particular source and distinguishes them from ot ...
or character onto products of a completely different nature. Examples of intangible assets include a song (" Somewhere Over The Rainbow"), a character ( Donald Duck), a name ( Michael Jordan), or a brand (The Ritz-Carlton). An arrangement to license a brand requires a licensing agreement. A licensing agreement authorizes a company which markets a product or service (a licensee) to lease or rent a brand from a brand owner who operates a licensing program (a licensor).Pete Canalichio. Licensing Brands, Inc. DBA BrandAlive
petecanalichio.com
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History

Brand licensing is a well-established business, both in the area of
patent A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention."A ...
s and
trademark A trademark (also written trade mark or trade-mark) is a type of intellectual property consisting of a recognizable sign, design, or expression that identifies products or services from a particular source and distinguishes them from ot ...
s. Trademark licensing has a rich history in American business, largely beginning with the rise of mass entertainment such as the movies, comics and later television. Mickey Mouse's popularity in the 1930s and 1940s resulted in an explosion of toys, books, and consumer products with the lovable rodent's likeness on them, none of which were manufactured by the Walt Disney Company. This process accelerated as movies and later television became a staple of American business. The rise of brand licensing did not begin until much later, when corporations found that consumers would actually pay money for products with the logos of their favorite brands on them.
McDonald's McDonald's Corporation is an American multinational fast food chain, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a hambur ...
play food,
Burger King Burger King (BK) is an American-based multinational chain of hamburger fast food restaurants. Headquartered in Miami-Dade County, Florida, the company was founded in 1953 as Insta-Burger King, a Jacksonville, Florida–based restaurant ch ...
T-shirts and even ghastly Good Humor Halloween costumes became commonplace. Brand extensions later made the brand licensing marketplace much more lucrative, as companies realized they could make real dollars renting out their equity to manufacturers. Instead of spending untold millions to create a new brand, companies were willing to pay a royalty on net sales of their products to ''rent'' the product of an established brand name. Armor All auto vacuums, Breyers yogurt, TGI Friday's frozen appetizers, and Lucite nail polish are only a handful of the products carrying well-known brand names which are made under license by companies unrelated to the companies who own the brand.


Reasons for licensing

A company may choose to license its brand(s) when they believe there is strong consumer acceptance for
brand extensions Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. The new product is called a spin-off. Organizations use this ...
or products. For example, when
Apple An apple is an edible fruit produced by an apple tree (''Malus domestica''). Apple trees are cultivated worldwide and are the most widely grown species in the genus '' Malus''. The tree originated in Central Asia, where its wild ancest ...
launched the iPod there was an immediate need for accessories such as headphones, charging and syncing stations and carrying cases. Apple decided not to manufacture these products and instead chose to have a licensee make the products. By doing so, Apple could offer branded "Earbud Headphones", "iPod docking stations" and "iPod socks." Each is made by a separate company but together offer the consumer an elegant solution. All of these accessories are sold by licensees. Apart from benefits to licensors, there are benefits to licensees as well. Licensees lease the rights to a brand for incorporation into their merchandise, but do not share ownership in it. Having access to major national and global brands, and the logos and trademarks associated with those brands, gives the licensee significant benefits. The most important of these is the marketing power the brand brings to the licensee's products. When brand managers enter or extend into new product categories via licensing they create an opportunity for a licensee to grow their company. Below is an example of the licensed product process steps: * Licensor chooses the product categories to be licensed * Licensor finds and negotiates a license with the best licensees * Licensees develop concepts, prototypes and final production samples and submit for approval * Licensor approves licensed products for sale * Licensees sell licensed products to authorized retailersMarketingProfessors.com
/ref> Licensees expect that the license will provide them with sales growth. This sales growth may be in the form of growth within existing market or the opportunity to enter a new market. To achieve this, licensees expect that the brand they are licensing has significant brand preference, that it will open doors and ultimately help them meet or exceed their business objectives. The licensing contract forces the licensee to achieve certain sales targets and royalties; therefore, the goal of the licensee is to quickly meet their business objectives, thereby achieving their contract obligations. Royalties are the money paid to a licensor by the licensee for the right to use the licensed property. It is calculated by multiplying the Royalty Rate by the Net Sales.Atlanta Business Radio Interview
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Global brand licensing industry

The main international
professional association A professional association (also called a professional body, professional organization, or professional society) usually seeks to further a particular profession, the interests of individuals and organisations engaged in that profession, and t ...
for brand licensing is the
Licensing Industry Merchandiser's Association Licensing International, formally known as (LIMA), founded in 1985, is the industry trade group of the $80 billion licensing industry. With over 1,000 member companies representing everything from major movie and TV studios and mega corporate brand ...
, which sponsors the annual Licensing International Expo. Each May, ''License! Global'' magazine publishes an annual list of "The Top 150 Global Licensors". For 2017, the leader was Disney Consumer Products with $53 billion in retail sales of licensed merchandise, followed by
Meredith Corp. Meredith Corporation was an American media conglomerate based in Des Moines, Iowa, that owned magazines, television stations, websites, and radio stations. Its publications had a readership of more than 120 million and paid circulation of more ...
with $23.2 Billion and PVH with $18 Billion. According to the International Licensing Industry Merchandisers' Association (LIMA), global licensed merchandise sales was $272.2 billion in 2016, versus $262.2 billion in 2015.


Brand licensing in South Korea

Han Chang-Wan, a professor at Sejong University, published the history of animation character design in Korea at the Character Licensing Fair 2016. This study became the first to have rabbit and turtle illustrations as Korean animated characters. This was revealed in '
The Independent ''The Independent'' is a British online newspaper. It was established in 1986 as a national morning printed paper. Nicknamed the ''Indy'', it began as a broadsheet and changed to tabloid format in 2003. The last printed edition was publish ...
' newspaper. With American and Japanese characters dominating the Korean animation industry until the 1970s, it wasn't until 1983 when
Dooly the Little Dinosaur ''Dooly the Little Dinosaur'' ( ko, 아기공룡 둘리) is a cartoon serialized from 1983 to 1993 by South Korean cartoonist Kim Soo-jung with a little dinosaur as the subject, and it refers to animations and other media mix works based on the ...
(아기 공룡 둘리) appeared in Bomulsum—a monthly magazine for kids—and changed the Korean character market. In 1987, Dooly the Little Dinosaur first aired as a six-part TV show, with another seven parts airing in 1988. In 1995,
Kim Soo-jung Kim Soo-jung () is a South Korean cartoonist and animator best known as the creator of Dooly the Little Dinosaur ''Dooly the Little Dinosaur'' ( ko, 아기공룡 둘리) is a cartoon serialized from 1983 to 1993 by South Korean cartoonist ...
, its creator, established a company named 'Dooly World' and went into the character design industry. The following year, the animated movie '
Dooly the Little Dinosaur ''Dooly the Little Dinosaur'' ( ko, 아기공룡 둘리) is a cartoon serialized from 1983 to 1993 by South Korean cartoonist Kim Soo-jung with a little dinosaur as the subject, and it refers to animations and other media mix works based on the ...
' was released. In the 30 years since Dooly the Little Dinosaur launched, its related market generated 2–3 billion won per year (about 1.7–2.7 million dollars as of July 2018). This paved the way for the character market in Korea.No, Jawoon (2013-05-01)
"'둘리' 이후 30년…캐릭터 시장 규모 8조원 육박'"
0 years after 'Dooly'… The size of Character market is closing in upon 8 trillion won Chosun Biz.


Brand licensing in India

The liberalisation of the Indian economy in 1992 brought a slew of international brands to India. Many of these brands have been licensed to Indian companies. Arvind represent Arrow, Cherokee, ELLE, Nautica, USPA, Aéropostale, CHILDRENS PLACE, Ed Hardy, GAP and Kipling. The Murjani Group is the licensee for Calvin Klein Jeans, FCUK and
Tommy Hilfiger Thomas Jacob Hilfiger ( /hɪlˈfɪgər/; born March 24, 1951) is an American fashion designer and the founder of Tommy Hilfiger Corporation. After starting his career by co-founding a chain of jeans/fashion stores called People's Place in upst ...
. Beverly Hills Polo Club (BHPC) is licensed to Spencers Retail. Character Licensing is another big licensing segment of brand licensing in India. The big players in the character licensing industry in India are Disney India, Viacom 18 and Cartoon Network Enterprises. Characters licensed out by Disney India include Mickey Mouse and Donald Duck. Viacom has brought in popular characters from
Nickelodeon Nickelodeon (often shortened to Nick) is an American pay television channel which launched on April 1, 1979, as the first cable channel for children. It is run by Paramount Global through its networks division's Kids and Family Group. It ...
like Dora the Explorer and
SpongeBob SquarePants ''SpongeBob SquarePants'' (or simply ''SpongeBob'') is an American Animated series, animated Television comedy, comedy Television show, television series created by marine science educator and animator Stephen Hillenburg for Nickelodeon. It ...
. Cartoon Network boasts of a portfolio including characters such as Ben 10,
Powerpuff Girls ''The Powerpuff Girls'' is an American Superhero fiction, superhero List of animated television series, animated television series created by animator Craig McCracken and produced by Hanna-Barbera (later Cartoon Network Studios) for Cartoon N ...
, Mr. Bean,
Roll no. 21 Roll or Rolls may refer to: Movement about the longitudinal axis * Roll angle (or roll rotation), one of the 3 angular degrees of freedom of any stiff body (for example a vehicle), describing motion about the longitudinal axis ** Roll (aviation) ...
, We Bare Bears.


Brand licensing in Italy

Brand Licensing in
Italy Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical ...
started in the seventies with very few Licensing Agencies. Apart from Disney which had its own dedicated office in the market, all the other big Entertainment majors were represented by independent agencies. One of these companies named DIC 2 (Distribution International Characters), founded in 1973 by Gianfranco Mari contributed to create the licensing business in Italy and set big phenomena as
He-Man He-Man is a fictional character and the main protagonist of the sword and planet '' Masters of the Universe'' franchise, which includes a toy line, several animated television series, comic books and a feature film. He-Man is characterized by ...
and the Masters of the Universe,
Marvel Comics Marvel Comics is an American comic book publisher and the flagship property of Marvel Entertainment, a divsion of The Walt Disney Company since September 1, 2009. Evolving from Timely Comics in 1939, ''Magazine Management/Atlas Comics'' in ...
, ''
Star Wars ''Star Wars'' is an American epic space opera multimedia franchise created by George Lucas, which began with the eponymous 1977 film and quickly became a worldwide pop-culture phenomenon. The franchise has been expanded into various film ...
'', Hanna & Barbera characters, Zorro,
Asterix ''Asterix'' or ''The Adventures of Asterix'' (french: Astérix or , "Asterix the Gaul") is a ''bande dessinée'' comic book series about a village of indomitable Gaulish warriors who adventure around the world and fight the Roman Republic, wi ...
and so on. DIC 2 is still one of the biggest independent agencies in Italy, representing different cartoon characters and famous brands.
THE FASHION BRANDS LICENSING SITE
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References

{{Reflist Brand management Intellectual property law