There are numerous reasons why trademark registration is advisable and how this action can help entrepreneurs protect their brands while at the same time boosting their performance. Besides providing invaluable legal protection, trademarks prove to boost partnerships and investment opportunities, allowing companies to maximise their growing potential. However, many established businesses may not be aware of the full potential of their trademarks and may not know how to leverage them to generate revenue and expand their brand. Some practical ways to get more benefit out of your trademarks include different forms of trademark commercialisation such as licensing and franchising agreements.
Licensing Agreements
Trademark licensing is a legal agreement between the owner of a trademark (the licensor) and another party (the licensee) that allows the licensee to use the trademark in exchange for payment. The licensor retains ownership of the trademark, but grants the licensee the right to use it for a specific purpose or within a particular geographic area.
A trademark license agreement typically includes terms and conditions such as:
The scope of the license: The agreement specifies the type of products or services that the licensee is permitted to use the trademark for.
The duration of the license: The agreement sets the period of time for which the licensee is permitted to use the trademark.
Payment terms: The agreement outlines the amount and frequency of the payments that the licensee must make to the licensor for using the trademark.
Quality control: The licensor typically retains the right to control the quality of the goods or services produced by the licensee using the trademark.
Trademark licensing can be a mutually beneficial arrangement for both the licensor and licensee. The licensor can earn revenue from licensing their trademark, while the licensee can benefit from using a well-known and established trademark to promote their products or services. However, it is important to carefully consider the terms of the license agreement and ensure that it protects the rights of both parties.
Franchising Agreements
Trademark licensing and franchising are similar methods of commercializing a trademark, which involve trademark owner transferring some of their trademark rights to another party, but there are some significant differences:
Business Model: Franchising involves the use of the trademark and a complete business system, while licensing agreements are typically focused only on the use of the trademark.
Control: In a franchise, the franchisor exerts more control over the franchisee's business operations than in a licensing agreement. The franchisor may specify how the franchisee operates their business, including the products or services offered, pricing, and marketing strategies.
Fees: Franchisees typically pay more in fees than licensees, due to the additional support and services provided by the franchisor. Franchisees generally pay an initial franchise fee, ongoing royalties, and other fees, while licensees typically pay a flat fee or royalties based on sales.
As with licensing agreements, both franchisors and franchisees must comply with legal and regulatory requirements, such as disclosure and registration requirements, to ensure that the franchise agreement is valid and enforceable.
Takeaway
By exploring licensing, franchising, and other commercialization options to generate revenue and expand your brand, you can maximize the value of your trademarks and leverage them to drive business growth and success. It is important to work with a qualified attorney or trademark specialist to ensure that you are monetizing your trademark in a legal and effective way. Book a free consultation and conduct a thorough review of your trademarks to identify any gaps in protection or potential opportunities for commercialization.
