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licensing agreements

How To License Your Business System For Profit

By Business Contracts, Business Lawyer
business system licensing agreement

Whether you’re solely online, offline, or a combination of the two, if you’ve developed a profitable business system, it may make sense to license it to others to create extra streams of income.

It’s easiest to do with a business that’s primarily offline in the “real” world. Because entrepreneurs in other geographic locations that don’t compete with you would be interested in learning how to replicate your success in their hometowns.

However, you can also license proven e-commerce business systems to others, even though the Web is global, without creating direct competitors.

For example, your venture may focus on English-speaking customers. If so, there’s opportunity to license your system to entrepreneurs targeting those who primarily speak Mandarin Chinese, Hindi, Spanish, etc. Yes, there will be some overlap with multilingual customers but chances are it won’t outweigh the upside potential of licensing your system.

Of course, it’s important to distinguish licensing a business system from franchising. Because franchising laws and regulations are onerous and often expensive to comply with.

And you don’t want to get categorized as someone selling business opportunities, particularly to newbies, unemployed, the elderly, and other demographics that consumer protection laws are designed to protect from being preyed upon.

If you’d like Business & Technology Lawyer Mike Young’s help in preparing a business system licensing agreement that’s right for your venture, the first step is to set up a phone consultation with him.

Products Licensing: How To Profit From It

By Business Contracts, Business Lawyer

Whether you sell products or services, you can make additional revenue by products licensing.

If you sell products, find complementary products available from third parties and license the right to sell them to your customers.

Depending upon the price point, a third-party product that you license can serve as an upsell, cross-sell, entry level product for your own product(s), or even be bundled with your products and sold together.

Of course, you can also license your products to be sold by others. Whether you receive a flat $XX per sale, a percentage of the sale, or some other revenue, it’s an easy way to generate additional cash flow while the third party handles the marketing and sales for you to their prospects and existing customers.

What if you only sell services? Chances are there are products that fit within your niche that can be licensed to sell.

Naturally, whether you’re the licensor or the licensee, the product license must make sense, i.e. be a natural fit for the licensee’s customers.

An experienced business lawyer can help you put together the right type of licensing and distribution agreement for what you plan to do that helps you maximizes profits while minimizing the legal risks.

Licensing Agreements For Your Products And Business Systems

By Business Contracts, Business Lawyer, Internet Lawyer

licensing agreements

In recent articles, I’ve shared with you two effective ways to grow your business on the Internet (sampling and endorsed reciprocal promotions). A third strategy to consider is licensing agreements.

Why?

Selling licenses for your products and business systems to other businesses can be a profitable method for growing your company without additional labor costs. Your licensees may pay an initial licensing fee in addition to ongoing royalties on sales made.

If you’re licensing a business system you own, it’s important to comply with applicable business opportunity rules and regulations. Your Internet business attorney can answer any questions you have about these limitations.

Related Article – 7 Keys To Picking The Right Internet Lawyer For Your Business

In addition, you’ll want to avoid setting up the licensing arrangement in such a way as it could be construed by the government as a franchise.

Why licensing agreements instead of franchises?

Franchising is a heavily regulated method of doing business because of a long history of franchisor abuse of franchisees. When you’re a franchisor, you’re under heavy scrutiny from federal and state agencies looking to protect both franchisees and their consumers.

Related Article: Licensing Agreements – How To License Products In 3 Easy Steps

Licensing agreements properly drafted by a qualified business lawyer will ensure that you get what you want from the deal while protecting your intellectual property rights in the process.

Licensing Agreements: How To License Products In 3 Easy Steps

By Business Contracts, Business Lawyer

licensing agreementsWhen you use licensing agreements, you can get others to sell your products for you, deal with the related sales taxes and paperwork, and pay you a percentage of each sale made (sometimes called a “royalty” or “licensing fee”).

Here are three simple steps to setting up a licensing program for your products.

Step 1 – Identify the markets where your products already sell and potential markets you haven’t tapped.

Step 2 – Approach key players in those markets about becoming licensees. If you don’t have a pre-existing relationship with these prospective licensees, you may want to consider sending a personalized snail mail letter and make a follow-up telephone call instead of sending a blind email that could be treated by recipients as spam.

Step 3 – Have your business contracts lawyer prepare a licensing agreement that covers all of the key terms, including what’s being sold (e.g. private labeling rights), what you get paid on each sale, etc.

Related Article – 7 Keys To Picking The Right Internet Lawyer For Your Business

If you’re offering the same terms to all licensees, you can have a licensing contract template prepared to use with multiple licensees. For unique licensing arrangements, your Internet attorney can customize the template as-needed.

What about using an affiliate program instead of licensing agreements?

You can actually do both.

Nothing prevents you from having an Internet affiliate program and also licensing your products to others to sell.

However, it’s a time-consuming pain in the butt to run an online affiliate program where you pay commissions on sales driven by your affiliates. Even if you can afford to pay an affiliate manager, chances are Internet sales taxes and other paperwork associated with operating such a program is a major time suck.

Related Article: How To Grow Your Online Business By Licensing Offline Brands

You can even let your licensees run affiliate programs for your products and pay a cut of their own profits to their affiliates rather than having your own affiliate program.

What if you don’t have any products to license?

Find an ecommerce business that has products you want to sell and approach the owner about becoming a licensee. Have your Internet lawyer prepare a license agreement that favors you as the licensee.

License Your Intellectual Property For Extra Income

By Business Contracts, Business Lawyer

If you’re selling products or services online, you’ve created intellectual property along the way. This can include special reports, eBooks, white papers, software, and even systems for doing business.

Why aren’t you licensing this intellectual property to non-competitors?

For example, look at how Disney’s Marvel division is making a mint with the new “Avengers” movie. There have been licensing deals for Avenger-related toys, colognes, cars, motorcycles, and even “collectible” key cards for a hotel chain.

You don’t have to be big like Disney to make licensing deals. There are plenty of entrepreneurs out there who have the bucks but not the ability to put together what you’ve already created. In some instances, they have the ability but would rather pay you instead of reinventing the wheel.

Remember, we’re talking about non-competitors, that is, people who don’t compete against you. This means that they’re not likely to cannibalize your existing biz if you structure the licensing deal right.

Here’s what to do…

1. Make a list of what you’ve created that could benefit someone else in business.

2. Consider what the type of rights you’d be willing to license. Think in terms of geography, kinds of noncompeting businesses that could benefit, and even foreign language versions of what you own.

3. Put together a plan with your Internet business lawyer to protect your intellectual property while licensing it to other entrepreneurs for extra revenues.