Types Of Sports License Agreements

Perpetual licenses are the most frequently released in software. A perpetual license is a license in which the licensee buys the right to use the IP only once and then be able to use it for the rest of his life. These are often the most expensive types of licenses, as the licensor does not receive current royalties. In an individual license, the licensor agrees to use only one licensee, but the licensor reserves the right to continue using its IP. A licensor may also be advised not to increase the price of good licensees in the market by insisting on extremely aggressive financial conditions – a licensee will add his royalty to his production costs and profit margin if he sets a selling price for a product. If this price makes the product commercially unprofitable, no one wins – retailers will not provide shelves for the licensed product, consumers will not be able to get the official product, licensees will leave the company, and the licensor`s license revenue will decrease. Counterfeiters are happy to fill the void and bring to market low-quality, often uncertain, products that do not comply with the brand guidelines and do not bring financial benefits to the licensor. Grant of Rights – The most important provision of any license and merchandising agreement is the rights grant clause. This clause clarifies the nature and extent of the rights granted by the licensor to the licensee. The clause specifies whether the license granted is an exclusive or non-exclusive license and also indicates the products and territories that may be exploited for commercial purposes. An exclusive license is a license in which only one licensee has the right to sell the licensed products in a given territory. The appearance of a major sports tournament or a significant victory for a team or individual can significantly increase the demand and value of a brand. If a long-term contract is signed with a licensee, a licensor may wish to include provisions that require additional “bonuses” from the licensor, depending on the success of the sports brand.

For example, as part of a long-term agreement giving a licensee the right to use the branding of a European football federation, a minimum income can be guaranteed each year, with this minimum amount increasing in the years in which the Federation`s national team will participate in the World Cup Finals and European Championships. . . .

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