Getting your first licensee is one of the most challenging steps in the licensing process. Sometimes it begins when you’re approached by a company interested in licensing your IP. Most often, though, it starts with marketing your licensing opportunity to potential licensees.
One of the best ways that you can do that is with a sweetheart deal. The strategy is simple – you offer your first partner a license at little or no cost up front.
Since you’ve got a lot riding on the success of your first licensee, it’s smart for you to put a lot of time and help in getting your licensing partner started. The reason is once you have the first licensee on board, you can use that licensee as a reference for other licensees interested in licensing your IP.
I consulted with a client who created a new event brand for nightclubs. They wanted to license the brand to nightclubs to create events and attract new customers. When they approached me, they had been contacted by a night club who heard about their brand. We negotiated the first license using the sweat heart deal…basically no up front money…in return for the night club promoting the brand and the event. The result was a big hit and lots of publicity. This kick started their licensing program, and it attracted several large nightclub operators who wanted to license their event brand for multiple locations.
When searching for your first licensing partner, consider companies that are close to you geographically. That way you can meet in person and its easier to work with them directly. You can search for potential partners in trade journals, online trade association directories and through trade shows. Referrals and networking are also one of the best resources for finding partners. So don’t limit yourself. Today’s video conferencing services, such as Skype, make it much easier to work with licensing partners in other parts of the world.
Whether your IP is a product, service, brand or technology, if you are looking for a fast way to get your first licensing partner, then use the sweetheart deal strategy. That doesn’t mean they are not a paying partner, it means no upfront costs and they pay you royalties on sales. It’s a win-win for everyone.