Licensing as a Business Model: What You Need to Know

 Licensing is the business model where a company sells licenses to others, mostly smaller businesses to apply the brand, design, intellectual property or business programs. The licenses are non-exclusive. It means that the licensing companies can sell them to multiple competing businesses which are serving in the same market. The licensing company is able to control the intellectual property will be used but have no control over the business operations. The venture that gets the license gets a certain amount of payment. 

In licensing, contract law has to be made between the companies. Each company has to sign in as a way of accepting the terms of the business. The contract indicates the number of years the licensing will be provided and the amount of cash that will be provided within the specified time. There is no registration required for the licensing to be done. There are no territorial rights associated with licensing as the licensee is free to offer similar licenses to other firms. Once the license has been sold, the licensee loses control over it, meaning they cannot determine how the business will be conducted. 

Walt Disney Company is one of the recognized licensing businesses and in 2016; it was named as the leading licensor in the world. The corporation has 56.6 billion dollars’ worth of licensed products. Disney Company has licensed businesses such as Marvel, Disney Pixar, Lucas film and Walt Disney Studios. Walt Disney has more than 150 brands which they license, and in 2016, about fifty-five of the companies brought more than one billion dollars (Fullerton, 2017). Licensing has helped in improving the operations of Walt Disney and increased their profitability. 

Reference 

Fullerton, L. (2017, April 17). Walt Disney Company world's is leading licensor with $56.6bn in licensed products in 2016. Retrieved November 1, 2018, from https://www.thedrum.com/news/2017/04/17/walt-disney-company-worlds-leading-licensor-with-566bn-licensed-products-2016