For the next few posts I will be breaking down a general Licensing Agreement clause-by-clause and giving brief explanations on what it all means. For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).
This is the next clause in a Licensing contract:
10. PREMIUMS, PROMOTIONS AND SECONDS
10.1 The Licensee shall have and retain the sole and exclusive right to utilize or license third parties to utilize any of the Licensed Products in connection with any premium, giveaway, in-theater sales, promotional arrangement or fan club (collectively referred to as “Promotional Products”). The Licensee shall still pay the royalty percentage to the Licensor for these products.
10.2 The Licensor shall be able to sell, promote or advertise the Licensed Product to their (Licensor name) membership and may utilize any of the Licensed Products in connection with any premium giveaway, sales, promotional arrangement or fan club (collectively referred to as “Promotional Prdoucts:”). The Licensor shall still pay for these games at the agreed upon price stated in Section 11 or an agreed upon price made in writing and signed by both parties.
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Technically, this first clause outlines that the Licensor allows the Licensee to license to other companies, the products they make that use the Licensor’s Property for sales, premiums (could almost be any type of discount, marketing tactic, loss leader, or variation thereof), give away (usually to media and potential buyers or celebrities for endorsement/testimonial and friends/family and shareholders), in-theater sales (there was talk of a movie or television show at the time), and other promotional arrangement (which could be almost any other way to market the Licensed Products). Of course the Licensee is expected to pay to the Licensor an agreed upon royalty for all of these.
10.2 Lets the Licensor also sell, promote or advertise the Licensed Products to their membership (which at the time was around 50 million people). They would also be able to sell, promote, giveaway, or use as premiums to their members or customers in pretty much any way they liked. Since this Licensor also has outlets throughtout North America and Associated branches throughout the world, it made sense to allow them to sell and market the Licensee’s products. This deal helps both the Licensor and the Licensee make money and cross promote their identities, which is a great way to brand your company or intellectual property. Of course the Licensor will have to purchase these Licensed Products from the Licensee at the price stated in Section 11 (which I will be covering next post).
Next – Licensing Agreement #13 PURCHASE PRICE
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As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accounting and tax advice in all contractual matters. I provide consulting which is detailed on the ‘services’ page of this website.
Hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com – please put ‘Your name & Licensing’ in the subject line of your email.
Thank you.
Sandford Tuey