Its a marketing and a brand extension tool widely used by big corporations, small businesses and start-ups. Fashion and luxury brands sell many product categories under one name: from apparel to eyewear. Do they design all that products? the answer is NO. Most of them are involved in licensing agreement

Entertainment, sport and fashion are most visible areas where licensing takes place. Other areas where intellectual property refers to creations of mind are:

  • inventions
  • literary and artistic works
  • symbols, names, images etc

Licensing takes place also at universities, colleges, museums, cities to protect or use the results of intellectual property.

Licensing is a lease agreement about a trademark or a copyrighted entity (the property itself), in which a licensee rents the rights from a licensor for use in conjunction with a product, service or promotion.

Piece of intellectual property is:

  • a design
  • a sketch
  • a logo
  • a cartoon

The licensor usually is the brand owner, gives to another entity, the licensee, the permission to use its trademark and style for production and/or distribution of one or more product category, within a specific territory and distribution channel, for a certain duration of time. The brand owner receives a royalty and a contribution to communication, both % of wholesale sales.

Product categories are: eyewear, fragrances, home textile etc. Specific territory can be local, regional, global.

The biggest Licensor in fashion industry is PVH Corp according to data of License! Global

The Phillips-Van Heusen Corporation (PVH Corp), is an American clothing company which owns brands such as Van Heusen, Tommy Hilfiger, Calvin Klein, IZOD, Arrow, and licenses brands such as Geoffrey Beene, BCBG Max Azria, Chaps, Sean John, Kenneth Cole New York, JOE Joseph Abboud and MICHAEL Michael Kors.

Which are the benefits and risks that Licensor might meet?

Benefits are:

  1. Financial: royalty income can generate a new revenue stream
  2. Increase brand awareness
  3. Reinforce key marketing messages
  4. Create additional consumer touch points
  5. Protect and strengthen trademark on a global basis
  6. Enhance brand personality
  7. Introduce new distribution channels
  8. Prevent others from using the same or similar trademark on products

Risks are:

  1. Product oversaturation
  2. Loss of quality control
  3. Risk of harming brands image
  4.  Financial instability of licensee

Logically here comes a question: And what  about The Licensee risks or benefits? So lets review them also

Benefits are:

  1. Greater marketing impact
  2. Increase consumer awareness
  3. Increased market share and revenues
  4. Access to additional distribution channels
  5. Gain of competitive advantage
  6. Expansion into a new product categories
  7. Improve of margins

Risks are:

  1. Advances and royalty commitments
  2. Manufacturing costs
  3. Investment in product development
  4. Inadequate marketing and promotional support

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Top licensing categories for fashion and luxury brands:

  1. Apparel
  2. Accessories
  3. Beauty
  4. Home
  5. Infant apparel
  6. Food and beverages
  7. Media
  8. Sport products
  9. Video apps, gaming
  10. Products for healthy lifestyle
  11. Gifts

Retail distribution channels for licensed products are: Department stores, specialty stores, discount stores, big box retailers, grocery, drugstores. Full research of Fordham Law school

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The origin of licensing

In fashion Licensing started in France in the 50s to support the extension of griffe on non-core categories such as fragrances. First brands in licensing:

  • Pierre Cardin
  • Dior
  • Chanel
  • Saint Laurent

In Italy licensing emerged in the 70s as a mean to help young designers develop and market their core products on a wider scale:

  • Gruppo Finanziario Tessile (GFT) with Armani and Valentino

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In USA:

  • Tommy Hilfiger
  • Ralph Lauren

 

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