Encore: Food Licensing Tip #5: In-House vs. A Licensing Agent

Food Licensing 101: Should I Use an Agent (you know my answer!)

There’s an old saying: "you can pay me now or pay me later."

Many companies contemplate licensing, but not all of them know how to launch a successful program. One of the biggest pitfalls they run into is when they try to do it themselves.

Companies who try to license their brand(s) themselves usually end up either giving up, or hiring someone from the licensing industry to work in-house.

"Pay me now, or pay me later."

Simply dumping licensing in the lap of an executive isn't going to lead to profitable partnerships because:

1.) that person already has a full-time job
2.) he or she doesn't know licensing & and will have to learn on-the-job
3.) licensing isn't just finding a licensee and signing a deal
4.) the bigger the company, the more likely they'll fail

Licensing has been described as an arcane, specialized business. Ad agencies and PR firms have tried-- literally for decades-- to find a way of getting in on the licensing action, usually with poor results. Of all the major licensing agencies, not one is part of an advertising or PR firm, nor have any advertising houses had a successful licensing program (other than promotionally like Burger King’s "Flame" cologne for men we discussed in yesterday's post). Part of the reason is that each licensing deal is unique in its own way, and requires marshaling specific skill sets, experience and contract guidelines. This is especially true about food brand licensing. Some of the reasons for this include:

1.) The complexity of the food business (just consider for a minute the various channels: grocery, convenience stores, club stores, vending, foodservice, etc.)
2.) The specialized skills required (e.g., what is a fair deduction from net sales for "slotting fees"?)
3.) The regulatory thicket (if it goes into your body, it has to be safe)

With few exceptions, companies who develop and deploy licensing programs from in-house have hired an experienced licensing professional. The majority of firms who have enjoyed great licensing success rely on agencies like Broad Street Licensing Group, either to deploy and then manage their licensing day-to-day, or help them set up and hire the right staff for in-house operations.

OK, now you've had a quick course in Food Licensing 101. Are you going to pick up the phone and call us?

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)