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December 6, 2020

Disadvantage Of Licensing Agreement

Filed under: Uncategorized — Chris Chaten @ 8:27 PM

In May 2018, Nestlé and Starbucks entered into a $7.15 billion coffee licensing agreement. Nestlé (the licensee) has agreed to pay $7.15 billion in cash to Starbucks (the licensee) for exclusive rights to sell Starbucks products (single serving coffee, teas, beans, etc.) through Nestlé`s worldwide distribution network. In addition, Starbucks receives royalties from coffees and packaged teas sold by Nestlé. If correct, licensing can be beneficial for both parties, both the patent and the licensee. However, licensing can also increase opportunities for competition and potential risks for both parties, so it is important to consider potential pitfalls. WIPO document, licensing of intellectual property assets; Pros and cons, available at (last call 10.01.2016) The licensee is able to retain the benefits of using the items granted. In return, the licensee receives an agreed fee on these earnings for the continued use of its items. Most licensing agreements also include a one-time prepayment for access to desired items. The licensing agreement allowed Starbucks to promote brand awareness outside of its North American operations through Nestlé`s distribution networks.

For Nestlé, the company has accessed Starbucks products and a strong brand image. The value of the brand can be positive or. Weston, B. (2019, March 21). Product license for beginners. It`s The benefits of licensing can be viewed from two angles: licensees and licensees. (ii) The franchisor who has the right to check the quality of services in the store or in the shop after the franchising agreement has, in addition to the advantages, some disadvantages for the licensee.

The licensee may become a competitor to the licensee. The licensee may induce the donor to pay less than the business losses resulting from competition from the new competitor; The licensee may request unexpected contributions, for example. B for technical assistance, human resources training, additional technical data, etc. It is important that the licensing agreement clearly defines the rights and obligations of the parties, as any future disputes can be resolved quickly and effectively; The licensee`s revenues depend on the skill, skills and resources of the licensee. With the exclusive license, this dependence is even greater. To avoid this, it is possible to provide for the provisions of the minimum wage and other provisions, but that remains a problem. Negotiating technology licenses is complex and you may have to pay for the experts you represent. If an element of the relationship with licensing is mismanaged, both parties may see a reduction in the trademark call of the corresponding IP address. If several licenses are offered, the global reputation may suffer, for several companies that are not involved in the situation. The only way to solve this potential management is to have good quality management practices.

This is why many licensing agreements contain a number of good practices that need to be followed to create brand consistency across all licenses. The benefits of franchising are similar to those of licensing. The franchisor does not cover branch development costs – it is the franchisee`s responsibility, although it generally requires a certain level of training and support. The risk of expansion is reduced exponentially, especially when it comes to entering the sharma, n.d. world markets. One of the additional objectives of a licensing agreement is to ensure that rights are protected by law, both by you, the licensee and the licensee.

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