Finding the first licensing partner is challenging. They are often the most difficult to get. Sometimes you get started when someone approaches you about licensing. But usually, it requires taking action to find your partners.
Even for an established brand like Dunkin’ Donuts. While the brand was well-known, they waited until they found the right partner for their first licensed product, iced coffee. But it wasn’t easy. It took lots of research to figure out what type of product offered the most value to a licensing partner. Then lots of time searching for the right partner with the marketing resources to make it a success at retail. And it paid off. Their licensed ice coffee rolled out in 2017, and within one year, its sales exceeded $150 million. Today Dunkin’ Donuts licensed products generate over $850 million in retail sales.
The first secret to selling a licensing deal is figuring out what makes your IP valuable to a licensing partner. Whatever it is, it’s got to be compelling enough to convince a licensing partner it’s worth the risk licensing it. The real value of your IP is the way a licensing partner can use it to increase revenues, cut costs, or gain a competitive advantage. Creating value is the first secret to attracting licensing partners. Nothing sells a licensing deal faster than proving that your intellectual property generates revenues and customers want it.
The second secret is licensing partners look for two things: an IP owner they like and trust, and an IP with a great chance to make a profit. The most successful licensor is one is one who is genuine and wants the licensee to make a profit. No one is going to invest the time and money upfront working with someone they don’t like or trust (the same is true when you are evaluating a licensee). Hard selling a license to get up front license fees is not the way to build a long-term sustaining partnership (but it’s a way to potentially end up in litigation).
The Internet is a good starting point for doing the first search. Look for a partner in close geographic proximity so it’s easier to meet with them. Also, consider friends and family as potential candidates for your first licensee. Trade shows are a great opportunity to meet a lot of potential licensees. You can also read trade magazines for a specific industry, such as apparel or toys, and learn about potential candidates. One of the best ways is through word-of-mouth networking at seminars, conferences and trade shows.
If you have an IP with multiple licensing opportunities, such as a brand (like Dunkin’ Donuts), character, book, or business process, your first licensee becomes your reference licensee. Other potential partners will want to know if they are successful, and speaking to an active licensee will be one your strongest selling points.
The best way to get your first licensee is to offer a sweetheart deal. Keep the licensing fee low (consider no first payment and royalties only) so it’s attractive to license and encourages them to get it into the market quickly. Spend time working with your first licensee to help them make the licensing deal profitable. Plus it helps you find out how to make your licensing opportunity more attractive to other licensing partners.
If you’re thinking about licensing, or ready to go, let’s schedule a call. We’ll have a short discussion about your options and how to use licensing to make money with your IP.