Franchisers and Licensees' Expectations
The development of a new product is fraught with many obstacles, and the journey from initial research and development to final marketing is quite long. Properly segmenting the market and attracting and retaining customers who recognize the product's quality and are willing to buy it over time requires substantial financial investment and effort.
However, when you purchase a license for a particular product, this process is significantly and immediately shortened because the brand license serves as the key to many doors, which undoubtedly helps to achieve clear business objectives.
This is truly a win-win situation because it enables the relatively easy establishment of a new business that can quickly become self-sufficient. Brand licensing agreements require payment of royalties based on sales, motivating the licensee to strive harder and earn more, resulting in the satisfaction of all parties.
Finally, the issue of royalties pertains to the fee paid by the licensee for the right to use the brand's marketing. The objective is to purchase a license and operate it successfully. When both parties have a mutual interest, great success can follow, and it is critical to be serious and prepared to invest.
In conclusion, the brand licensing process is a legally protected procedure that involves an agreement between two commercial entities: the asset owner, who also owns the right to sell franchises, and the manufacturers who are interested in purchasing the potential that brands licensing offers. The use of a franchise is subject to certain conditions, such as marketing for a specific purpose or in a defined geographic area.
Additionally, there is an end date for the agreement. In return, the party selling the franchise receives monetary royalties, which are typically a percentage of the franchiser's sales revenue from the product. Most franchise agreements also define a minimum royalty as a type of guarantee from the franchiser to the brand owner. This minimum amount is payable regardless of how low the income may be and is often paid at the outset as an advance, demonstrating the seriousness and responsibility of both parties and the commercial process.
When someone purchases a brand license, they are essentially buying a finished product without having to invest in research and development. All they need to do is manufacture and market it. In this context, there is also legal protection because the purchase of a specific category precludes potential competition with others who hope to enter the same niche but are unable to do so by law.
Furthermore, the realm of royalties is crucial. Usually, a company acquires a license and pays royalties as a percentage of its wholesale sales of the name-brand product. Since this process shortens other procedures, income is generated rapidly and immediately translated into profit.
Moreover, the franchiser's investment risk is relatively low compared to other fields, which is another encouraging factor. Remember, consumers are always willing to pay more for brand names! In reality, it is becoming increasingly difficult to sell non-name brand products.
Therefore, it is our belief that you have a greater chance of selling and marketing well-known brand names and increasing your profits.