WE’VE all head of a licence to kill. How about a licence to make a killing? In financial terms that is!
Firms looking to expand into new markets both in the UK and overseas can use brand licensing to build business and explore new markets.
Consider this, global retail sales last year approached £100billion, with Asia a hotspot. It highlights the opportunities for companies to expand.
The business with a strong brand can ‘issue’ licences to another company to produce goods for them, in exchange for royalties, which is typically a percentage of the wholesale price. Partnerships are forged, relationships strengthened and responsibility and strategy can be shared.
The benefits suit both parties, the brand company being able to enter new markets without having to commit time and resources while the licensee can grow into new markets knowing the demand is there. Everyone’s a winner!
As building a brand is costly, buying into one through a license can be a prudent way for a firm to grow – although making sure you calculate that profits can still be made after paying royalties is vital. Given there is a huge appetite for global brands it offers food for thought – not to mention exciting opportunities for expansion.