4 Benefits Of Expanding Your Business Through Licensing

by | Dec 4, 2017 | Business, Law

Once an entrepreneur passes the startup stage, expansion is the next challenge for an entrepreneur. There are many ways to expand your business. One of the ways is through Licensing. Licensing is when one company (“Licensor”) gives permission to another company (“Licensee”) to use the Licensors company name; brand; products; intellectual property; and goodwill. Here are 4 benefits of expanding your business through licensing:-

1.No Additional Overheads

When you license out your business, the Licensee is the party that will bear all the costs of setting up the Licensee business. For example, if you intend to enter the Johor market by licensing, the Licensee will have to bear the costs of looking for the premises; renovations; staff etc (with guidance from the Licensor). As the Licensor, you do not incur additional costs. You will still only manage your own existing business.

2.Increase Brand Awareness

Your brand will be seen to have more value if it is seen in a lot of areas. Increased value will also mean more value to both the Licensor and Licensee. Increased brand awareness also equals to increased credibility in your brand.

3.Additional Income

A carefully crafted Licensing Agreement will allow the Licensor additional income through

  • Increased market access.
  • Initial Licensing Fees;
  • Purchase of stock and materials by the Licensee from the Licensor; and
  • Trainings provided by the Licensor to the Licensee.

4.Faster Expansion

You commit less resources and less time to expand your business. You use the resources, time and expertise of other people (your Licensee).

Expansion through licensing is not easy, but nothing in business is easy. Consult with your accountant; commercial lawyer; business consultant; and Standard Operating Procedure (SOP) documentation consultant before exploring into licensing. Getting it right from the very beginning saves money and time.

NIK ERMAN NIK ROSELI

Commercial & Sports Lawyer | Mediator

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