License Agreement Pros And Cons

In both cases, the goal of all products and services is naturally to make a profit. An important question is whether you will be able to achieve more revenue by starting your own business and producing the product or service yourself, or whether licensing to another company will give you a greater return for all your hard work (Abedi, 2018). Patents represent a significant capital investment for small businesses or start-ups. If you don`t have the money to make or sell your own product, or if you just decide not to, you can license it to someone else. Often, the classes of licences overlap and are not mutually exclusive. The most important thing is that the agreement is the description of the product or service to be granted, the issuance of the license for the exploitation of the intellectual property or asset, the obligations of both parties and, above all, the agreement of financial arrangements, both the minimum payments and royalties for sales, as well as the minimum revenue target and schedule (“All types of license agreement templates, == Individual supporting documents == The benefits of licensing can be considered from two angles: licensors and licensees. Abedi, K. (2018, October 22). So you invented something.

And now? (License your product). Retrieved from sites.psu.edu/entrepreneurshiplaw/2018/10/22/so-you`ve-invented-something-now-what-licensing-your-product-agreement/. Another possibility is for the licensee to go bankrupt. When negotiating bankruptcy, the license could easily be awarded to one of its creditors. Negotiate to prevent this. For example, you can insist that if the company becomes insolvent or bankrupt, the license expires automatically. If there is a licensing agreement, the licensor can introduce their product to new markets much more easily than if they did the work alone. It is much easier to enter foreign markets in this way, as licensing allows intellectual property to skip the limit requirements. This means that tariff barriers to market entry can be avoided, since a national company uses IP, just as the licensor could use IP on the national territory. At this point, you must first decide if you want to start your own business or if you want to license your product to another company.

A big part of the decision is figuring out what control you want to keep and whether you have the resources to start your own business. Licensing and franchising are both simple and complex. Much is taken into account in the final outcome and decisions on how to proceed should be taken with caution. It is generally recommended that you have the help of a lawyer who is knowledgey of licensing agreements to ensure that your agreement is negotiated correctly. Most licenses are only available for a limited time. Although this period can be 5 to 10 years, there is an expiration date that must be taken into consideration by the licensee. Is it worth investing time, effort and money in promoting goods or services that might not be available to them at the end of the license term? Is there a guaranteed licence renewal rate, especially when the expiry date is less than 5 years? A balance between royalties and revenues must be found that is useful for all parties involved. . . .