Should You License Your Designs?
Question: “I want to get started quickly, but don't want to go through the hassle of manufacturing clothes myself. Can't I just sell my designs to someone, like through a licensing agreement?” Answer: Yes -- and no.
Yes, there are lots of companies out there ready and willing to help you license your designs. They'll be happy to slap your name on everything from sunglasses and hosiery to towels and wallpaper and pay you a tidy sum for the privilege. But only if you have one thing: a recognizable name. And I don't mean one that would only be known at a family or class reunion. I mean one that's discussed around the world in newspapers, on television, and in magazines. Why? Well, here's how it works: Licensing is an agreement where the owner (licensor) of a particular image or design sells the right to use the image or design to another party, typically a manufacturer (licensee), in exchange for a royalty. The licensee buys the right to use the image or design, referred to as “the property,” to add value to its merchandise. So you bring your brand name and myriad of loyal fans, the manufacturer brings his know-how and distribution chain, and together you have an instant product with a built-in customer base. It's a win-win, cash-in-your-hand-right-now kind of proposition. Which is exactly why licensing agreements are so popular. There are many different types of licensed goods, but the most common include: CHARACTER licensing, such as cartoon and movie characters, and those found in works of fiction. Mickey Mouse, Spiderman, and Harry Potter are all characters that have made money with licensing agreements. CORPORATE licensing, which involves using brand names and trademarks of large corporations like IBM, Harley Davidson, and Coca Cola. DESIGNER NAME licensing, in which a designer lends his or her name to a variety of products like luggage, perfume, or hosiery. Pierre Cardin, Donna Karan, Ralph Lauren, Chanel – all have licensing agreements, as do many others. CELEBRITY NAME licensing, in which a celebrity uses his or her name to build a brand. Elizabeth Taylor, Sophia Loren, Kathie Lee Gifford, and Jaclyn Smith are all examples of celebrities who have licensed their name. NOSTALGIA licensing, of past legends and heroes like Elvis Presley, Marilyn Monroe, James Dean, and the like. SPORTS and COLLEGIATE licensing, in which images of professional sports teams or university logos are sold on all types of merchandise. EVENT and FESTIVAL licensing, where images and logos are used for event-specific merchandise like Ascot, LICENSING OF THE ARTS, for merchandise featuring replications of great works of art. So when are you LEAST likely to attract a licensee? When you're just starting out.
Manufacturers aren't going to risk manpower and materials on an unknown entity. If you don't have a recognizable name, then you're going to have to demonstrate that you know how to spot trends or that you know how to generate excitement for your brand. If you can't bring a fan base, then a profitable track record is your next best bet. So let's say that you DO land a licensing agreement. How much of your input is required? It all depends on the agreement. Sometimes the licensor will have a lot of input into the design and quality of the materials used, other times, he won't. If you're Ralph Lauren, for example, you're going to be pretty picky about what you put your name on, since it's a reflection of the brand you've established. If you're one of the Backstreet Boys, you probably won't be as choosy, since dissatisfaction with a faulty lunch box or t-shirt -- typical boy band licensed products -- won't have much of an impact on your music career. The key to success is control. Don't just sign on the dotted line and wait for the royalty checks to come in. If you do, you're a fool. You MUST make sure you understand the terms and conditions of the agreement, which means bringing in a licensing lawyer who will work for your best interests. Lawyers' fees are a small price to pay to ensure control of your creation. Think I'm being over-dramatic? Walt Disney thought he was signing a licensing agreement for one of his creations in 1928. Instead, he SIGNED AWAY the rights to the character. Once he recovered from the shock of his own naivety, he spent the train ride home from Halston had a similar misfortune. After creating the pillbox hat for first lady Jacquelyn Kennedy and later building one of the most status-laden brands of the 1970's, Halston entered into a licensing agreement with JC Penney. But instead of maintaining his high standards, they slapped his named on inferior merchandise and quickly cheapened the Halston label. The brand never recovered. So should you consider licensing? Absolutely! Regardless of your fashion area of interest, there are all sorts of products out there that you can tie into to build your brand. Whether you like art, clothes, interiors, hair, cosmetics, furniture, cookware, or whatever, there are lots of manufacturers who would be willing to work with you. Once you have a fan following, that is. So if you're just starting out, put it on your long range plans “to do” list, like five years from now. It will give you something to aim for that can put big bucks in your pocket. If you're already established in the fashion industry – and I know many of you reading this are – think about what kind of products will help you build your name. Then look for licensees who can deliver. So do you go to them or do they come to you? It can happen both ways. Some licensees will seek you out if you have a recognizable name. This often happens with movies and television shows, where manufacturers of lunch boxes, toys, backpacks, and children's apparel are quick to take advantage of a popular show or blockbuster movie (Happy Meal toy, anyone?).
Other times, the company with the brand name will want to expand to different areas and will seek out others with specific expertise in those areas instead of starting from scratch themselves. For example, designers typically approach perfume, shoe, or home interior manufacturers when they want to expand into those areas. So who are some of the most successful licensors right now? There are literally hundreds to choose from, but here are some names that make a fortune from their licensing agreements: Disney – After Walt learned his first licensing lesson the hard way, he later perfected the art of negotiating licensing agreements. From toys to bedding, wallpaper to watches, you can find licensed Disney characters on EVERYTHING – including the bathroom sink. The Olsen Twins – Love 'em or hate 'em, these teenage multi-millionaires have built a bountiful cottage industry through licensing, raking in $15 million in 2002, according to Forbes.com. Toys, clothes, shoes, cosmetics – little girls all over the world have sought out licensed Mary Kate and Ashley products for more than a decade. Martha Stewart – Wherever you stand in “Marthagate,” there's no denying that this woman can build a brand. She created a fortune out of baking cookies and planting flowers and earns TONS of money from licensing agreements. From towels and sheets to paint and furniture, Martha knows what it takes to attract licensees. So how can YOU tap into licensing, once you have a little name recognition? Here are some places to look:
Licensing your designs is a great way to build your brand AND your bank account quickly and efficiently. Aspire to it. Try it. As Martha would say, “it's a good thing.” ============================================= Diana Pemberton-Sikes is a fashion writer and image consultant
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