Franchisers and Licensees' Expectations
Many obstacles face the development of a new product, and the road from initial research and development to final marketing is very long. One must properly divide the market, acquire and accumulate customers for the product who recognize its quality and want to buy it over time. This entails a very large financial investment and a lot of work. When you purchase a license for a certain product, this process is immediately and automatically shortened, because the brand license is essentially the key to many doors, which will certainly help attain clear business objectives.
It is really a win-win situation. In this way, one can relatively ease start a new business that very quickly can stand on its own feet. Brand licensing agreements demand payment of royalties based on sales, resulting in the license purchaser's desire to profit more and try harder, so everyone is happy.
Last but not least, the issue of royalties means the threshold paid by the license's purchaser for the right to using the brand's marketing. The goal is to purchase a license and operate it successfully. When there is a mutual interest, great success can follow, and obviously, it is important to be serious and ready to invest.
If so, in conclusion, we can say that the brand licensing process of leasing is actually a protected legal procedure. It is an agreement made between two commercial bodies: the owner of the asset who also owns the right to sell franchises, and the manufacturers interested in purchasing the potential that brand licensing provides. This usage of a franchise is obviously subject to certain conditions, like marketing for a certain purpose or in a defined geographic area. There is also an end date for the conclusion of the agreement. In exchange, the party selling the franchise receives monetary royalties, which are usually a percentage of the franchiser's sales revenue from the product. Finally, most franchise agreements define a minimum royalty as a type of guarantee of the franchiser toward the brand owner. This minimum is payable no matter how low income may be and is often paid at the outset as an advance, indicating the seriousness and responsibility of both the parties intentions and the commercial process.
Someone who purchases a brand license is actually buying a finished product, without having to invest in research and development processes. All he or she needs to do is manufacture and market. There is also legal protection in this context because the purchase of a certain category prevents potential competition with others who hope to enter the same niche, but who cannot do so by law.
And what is more important is the sphere of royalties. Usually, a firm receives 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 quickly generated and immediately translated into profit. It is also important to remember that the franchiser's investment risk is relatively low when compared to other spheres, and this acts as another encouraging factor. And remember, consumers, are always ready to pay more for brand-names! In fact, according to our experience, it is becoming more and more difficult to sell generic non-name brands. We are therefore convinced that you have a better chance of selling and marketing well-known name-brands and increase your profits.