Merchandise or Brand Extension Agreement

Merchandise or Brand Extension Agreement

A merchandise license agreement is a form of a license agreement through which the licensor grants the licensee, the right to use its intellectual property (IP), like fictional characters, logos, films etc. for marketing, distribution and sale of products. Merchandise licensing can be an extra source of revenue wherein the licensor can earn from royalties. The licensor may not have expertise in a certain field, due to which he may engage the licensee to manufacture products using the IP of the licensor.

Merchandise licensing is profitable for both the licensor and the licensee as it provides the licensor with additional revenue and the licensee with profits from the goodwill associated with the licensor's IP.

WHAT ARE THE KEY ELEMENTS OF MERCHANDISE LICENSE AGREEMENT?

The key elements of a merchandise agreement are:

Clearly defined licensed property and licensed products
Channels of distribution
Geographic areas
Grant of rights
Quality control standards
Indemnification and Insurance
Royalties
Term and termination
Dispute resolution

WHAT IS A BRAND EXTENSION AGREEMENT?

A brand extension agreement is a definitive agreement where a company determines to launch new line of products or services under its established brand, by partnering with other companies. The relationship between the company having its established brand and the other company with which it partners to launch the new line of products or services is governed by the brand extension agreement or brand licensing agreement.

WHAT ARE SOME ADVANTAGES OF BRAND EXTENSION?

Some advantages are:

Increase in income through royalties for the company lending its brand name
Expanding the visibility of the brand
Expanding the brand’s footprint in different line of products or services

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