Advantage And Disadvantage Of Licensing Agreement

Most licenses are available for a limited time. Although this period can be 5 to 10 years, there is an expiration date that must be taken into account by the licensee. Is it worth investing time, effort and money in promoting goods or services that may not be available to them at the end of the licence term? Is there a guaranteed renewal rate for the licence, particularly if the expiry date is less than 5 years? There has to be a balance between royalties and revenue, which is useful for all parties involved. Product license. (n.d.)`s call. (i) Some products may be subject to the franchise agreement, and it will be a limit for franchisees, the simplest example of a franchise agreement can be seen in the fast food industry. If you go into mcDonalds or Dunkin donuts, you will see a very similar, if not accurate, business model of branding and product range. These details are dictated by the franchisor. While the franchisee is in daily business, the franchisor has significant control over the process. The franchisor thus retains more control over the service than a licensee over the manufacture of a product (Sharma, n.d.).

The pros and cons of licensing can be overcome if due diligence on both sides is carried out before any agreement is reached. A licensing agreement can be beneficial because both parties have the opportunity to make a profit. It can also be detrimental if a licence is over-reconducted or if one of the parties acts in bad faith. If you decide to sell or license your patent, you should keep detailed records of all contracts or agreements you have entered into. Look for a lawyer if in doubt. Weston, B. (2019, March 21). Product license for beginners. It`s One of the additional objectives of a licensing agreement is to ensure that rights are protected by law, both by you, the licensee and the licensee. By entering into a contractual relationship, your patented technology or product cannot be violated without penalty by the licensee (the company with which you enter into a contract). The licensee is also protected and can use your patented technology, idea or product for as long as your agreement allows, provided you have the fee established on the agreed date (“All types of licensing models”).

The licensee also has the advantage of potentially increasing his own profits beyond the amount he might otherwise have appreciated. The purchase of intellectual property would have been too expensive. By paying a licence fee, the licensee must pay less money in advance to enjoy the benefits of access to technology or property. If it is an invention, it can improve it and potentially earn more money than if it had started from scratch. If it is a brand, it can benefit from the brand`s reputation and the additional revenue that could bring it. WIPO document, licensing of intellectual property assets; Pros and cons available for (the last appeal took place on 10.01.2016) Beyond these advantages, the disadvantages of international franchising as follows: iii) In some cases, protectionist barriers such as tariffs, quotas or cultural barriers could pose a problem for entry into a foreign market; However, the licensing agreement is an appropriate means of overcoming these obstacles, otherwise the granting of an international licence has the following drawbacks: (iv) The licensee should evaluate the licensee if the trademark is not subject to it. [9] (ii) The franchisor who is authorized to verify the quality of in-store or in-store services pursuant to the franchising agreement, the licensing agreement has given Starbucks the opportunity to promote brand awareness outside of its North American operations through Nestlé`s distribution networks.

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