If you’ve trademarked your business, but haven’t monetized those trademarks, you may be leaving money on the table.
If your business already has that all-important ® symbol after its name, that was a great first step. A trademark registration with the United States Patent and Trademark Office (USPTO) is crucial for protecting one’s brand in a competitive modern environment. But now that the trademark is protected, it’s time for step two: monetization.
But wait, aren’t I already monetizing my trademark with the goods and services that my company sells? Sure. But why stop there? Let’s talk about a revenue stream you may not be familiar with: trademark licensing. If you have been wondering how your business can access additional revenue streams, rethinking your business model, or wanting to extend your brand into a new market, you’re going to want to read this post all the way through.
What is trademark licensing?
Trademark licensing is something you experience in everyday life without realizing it. It goes like this: Business A has a successful offering and wants to expand into a new market. Unfortunately, Company A lacks the capacity and/or expertise to actually execute the expansion. Meanwhile, Company B is already making the product or offering the service that Company A is interested in. Company B’s problem is that it doesn’t want to start from scratch - Company B would love to market themselves under a brand that consumers already trust. So they strike a deal: Company B will produce the goods and services, put Company A’s name on them, and pay Company A a licensing fee. Everyone wins because Company A has a new line of business that it didn’t personally have to build out, and Company B gets to market its products by leveraging A’s good reputation.
You have seen this in your everyday life without realizing it. Think of a brand like Arm & Hammer baking soda. Now think of all the other Arm & Hammer products you’ve seen on the shelf: everything from body wash to trash bags, to air purifiers. Guess what? Many of those are licensed products; products that Arm & Hammer did not directly manufacture on its own. That is just one example of the many licensed products you encounter every day, without knowing it.
So what is trademark licensing? It’s a way to leverage the brand you have already built to create new revenue streams for your business. The best part? You don’t have to directly create or market the licensed products - you can partner with another business that will pay royalties in exchange for using your brand.
When does trademark licensing make sense?
Trademark licensing is not a right for every business. Here are some points to think through:
Is it time to change your business model?
If you and your team are constantly working, but still not making the money you want to make, it may be time to rethink your business model. This situation is common in service-based businesses when the business owner is personally providing the service and the customer’s willingness to pay is limited. One example is fitness or dance class instructors: people are only willing to pay so much for a fitness class. At most, the willingness to pay probably maxes out at around $30 per class for a boutique gym experience, up to $200 per class for private ballet or ballroom dancing. Because there is a cap on how much the average customer will pay for the service, a business owner eventually reaches the point where their schedule is full, but they still aren’t making the revenue they desire.
At this point, if you’ve built a good brand, trademark licensing is one possible solution. One brand that has done this very well is Zumba - Zumba licenses its trademarks to individuals, who get certified and then advertise themselves as Zumba instructors. The company also sells Zumba merch such as T-shirts and sneakers. This business model has worked so well that Zumba has grown into a company valued at an estimated $500 million. Not bad at all.
Do you want to expand, but lack in-house capacity or capability?
Maybe business is good and you’re not worried about burning out or hitting a revenue plateau. Instead, you have a solid product/service, and your gut tells you it could do really well in a new market. However, you don’t have the in-house capacity for an expansion or a build-out of that magnitude. In this situation, trademark licensing can be a great way to expand without actually having to do the expansion yourself.
Is there a licensing partner that you trust?
Trademark licensing means giving someone else permission to use and monetize your brand. This is not something to do lightly, and it's important to work with a good trademark licensing attorney to nail down the details. The right attorney can assist with due diligence to assess whether a potential licensing partner has the capability, the capacity, and the quality standards that they purport to have.
Is your business leaving money on the table? Do you have intellectual property that could be monetized that is literally sitting idle on the shelf? Hopefully this post kick-started a brainstorming session for how you can leverage the intellectual property that your company already owns.
Thanks for reading the Bevel Law Blog! While this information is hopefully helpful to you, nothing in this blog is intended to be legal advice. Always consult a lawyer before making any legal decisions based on topics in this blog.
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