I am officially declaring my 2 year old potty trained!!!  We still carry the little potty around in the mini-van incase of emergencies but we have been accident free for about a week now!  Yeah!!!!  

I received an email yesterday from my sourcing agent and he said we are a little ahead of schedule on the first samples.  I am so excited!  It still seems like a long road before me until I can get to selling, but I am plugging along over here…one slow, small step at a time.  It’s a pretty cool feeling!!! 

There has been some talk on the board about licensing and while I have a short explaining on the post, I figured I’d spend a LITTLE more time on the subject here.  As with most subjects, entire books are dedicated to licensing your product, so by all accounts this will still be a VERY abridged version of the topic, but it might shed some more light.   

To recap my post in case you missed it here is the gist of it, along with some added information.  If you are not interested in manufacturing your product yourself and building a business around it, licensing your product to an existing manufacturer is something to consider. A licensing partner is basically another company that you “sell” the rights of your IP / invention to.  The licensee will then develop and sell your product for you and in return you get a percent of sales or possibly an upfront sum or both. The initial steps for going the licensing route and manufacturing the product yourself, are still the same. The product or invention must not infringe on someone else’s IP, it really should be patent pending at least (a full patent will sweeten the deal) and you should be prepared to show working prototypes or at least engineered drawings. This is not always the case, but it is typical. Your licensing partner then “buys” the rights to your idea, patent, copyrights or trademarks, whatever it is that you have to sell. Licensing deals vary from industry to industry, but in general you can expect 1-5% of sales.  There are reports as high as 15% but that is not “typical”. There are so many nuances regarding negotiating the licensing agreement that I HIGHLY recommend an IP attorney that specialized in licensing help you with it.  To give you some things to think about, in your agreement are your royalties based on gross sales, net sales, gross sales minus returns, gross sales plus shipping minus taxes etc…  How will you protect yourself against “creative accounting” on the part of the licensee?  What kind of reports will you be entitled to review and how often? You should probably negotiate a minimum in case the licensee for whatever reason isn’t selling your product well or has put it on the back burner.  Are you going to give one company exclusive rights or will you leave yourself open to multiple licensees?  (There are benefits to both)   If you receive an advance (which is common) is it truly an “advance” on royalties, meaning you are just receiving money you would have gotten in your monthly or quarterly check, but you choose to take a lump sum upfront or is it money “given” to you when you sign on the dotted line, no strings attached?  Both are common.    

The dance between licensee and licensor is a complicated one, so I feel hiring a professional is money well spent.  Licensing one product is not the way to make millions. You might get a little check each quarter, but you certainly will not be rolling in the moola… okay, maybe not CERTAINLY NOT, but it’s highly unlikely.  Being a serial licensor however, is a great way to make good living! As with most things, you just have to be good at what you do, so if licensing your patented inventions is your thing, know your stuff, know your industry, present professionally, research research research and be the BEST!   

Leslie Haywood, Founder and President of Charmed Life Products, Inventor of Grill Charms™  www.grillcharms.com