3 Critical Moments In The Brand Licensing Workflow

Licensor's primary duty is monitoring and optimizing the licensing journey throughout its lifespan. Of the numerous tasks implied by this duty, some present the turning point, requiring licensors' special attention. In such moments, licensor's ability to react to the situation is significant and may directly affect the outcome of a licensing program. On the whole, there are three critical licensing moments that licensors should keep a special tab on to own the success of their programs.

Contract sign-off

Signing a licensing contract is where the brand's licensing journey begins. For this reason, licensors must be particularly vigilant at this point in the brand licensing workflow. After the licensing partners agree on deal terms and record them in the deal memo or the term sheet format, the process turns to reviewing the contract, i.e. the final step before the actual designing and manufacturing processes begin. Hence, brand owners should aim to move those agreements onto the activation stage as soon as possible.

Regarding the sales pipeline progress, no profitable action is possible without closing the contract first. It must be noted that zero revenue gets generated from negotiations with licensing partners. It's therefore in the licensor's best interest to move towards closing the current stage after the first negotiation with licensees.

Design and product feedback loops and approvals turnaround time

In brand licensing, the products sold in retail are the key profit-generating point. In contrast, the concept work per se is of no financial advantage to licensors. Nevertheless, one of the last approval steps in the licensing flow is reviewing the physical samples of the licensed product and granting the licensee ultimate permission to distribute the product. Considering the complexities involved, taking this step implies significant hustle for both sides. Finding consensus over a product prototype requires certain traction and thus can often become time- and energy-consuming procedure.

Ultimately, the mission of the Brand Assurance team is to facilitate the product approval processes. What's most challenging in this process is the high probability of the licensor accidentally losing track of those sample approvals. Should this happen, the development of licensing production can drag on for months, thus causing delays in the program's launch.

The problem here is similar to that in the agreement negotiation phase: it is rather challenging to keep the ball of product approval, particularly of those products that are closest to the manufacturing phase, rolling and move them to the next milestone. This also means that the samples that have arrived for review should be a higher priority than the concept work that is queuing for feedback.

Sales report validation and invoicing

Ultimately, behind every licensing program, there's a licensor's strong desire to drive revenues. Accordingly, every brand owner wishes to see their campaign's excellent performance in retail and, naturally, no less than excellent profits that it yields. However, not all understand the importance of monitoring the program's performance at the start. Neglecting this need frequently leads to erroneous decisions and financial losses.

After the first batch of products is sold, the licensee is expected to send the first sales report. On this stage, it's essential to measure the sales KPIs, validate the revenues against the program’s initial goal, and promptly invoice their licensing partners. Licensing profits hinge on the sent invoices and are calculated against sales reports and the minimum guarantee recoupment balance. Hence, it is important to regularly check for the multiple-figure sums that might be pending for approval.

Keeping control over the brand licensing process is all about making headway of moving onto the following stages. To efficiently handle the critical moments, licensors need to remain flexible and attentive, besides being competent in the aspects above. Additionally, collaborative spirit plays a huge role in succeeding with a brand licensing program. The more cohesive the cooperation between the licensing stakeholders is, the more favorable will be the outcomes of joint efforts.

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