PRACTICE TEST- WHAT IS LICENSING? – LICENSING BASICS (Objective A&B)

What is licensing?
Allowing another company to use a brand name, patent, or any other item for a fee or royalty.
What type of property is the basis for licensing?
intellectual property.
How is licensing different from branding?
Licensing isn’t branding because branded items don’t use another company’s trademarks, they only feature the logo of the manufacturer.
How is licensing different from sponsorship?
Licensing isn’t sponsorship because sponsorship agreements are merely paid affiliations between teams/events and companies, while licensing agreements are about the paid usage of trademarked property.
How is licensing different from endorsements?
Licensing is only associated with trademarked property agreements. Licensing is not the promotion of products by teams/athletes, which is associated with endorsement.
Give four different examples of licensors.
1.) sports leagues (NHL for example)
2.) individual teams (Detroit Red Wings for example)
3.) college athletic departments (NCAA for example)
4.) individual athletes (Tiger Woods for example)
Give four different examples of licensees.
1.) Adidas
2.) EA
3.) Upper Deck
4.) Siskiyou Gifts
Why are T-shirts the best-selling licensed clothing item?
They’re practical and allow people to make clear statements about which team they’re loyal to.
Why are trademarks so important to licensing agreements?
Trademarks legally protect teams and sports events in a licensing system.
Why is licensing a low risk business strategy for a licensor?
A licensor is able to skip the steps of developing, manufacturing, and selling the products. So, all of the money that licensors make from the products is pure profit, saves time and effort, and is not a marketing gamble.
Name at least three benefits of being a licensor.
1.) low risk profits
2.) market expansion
3.) control
What is a guarantee in licensing?
The fee a licensee pays up front to use the trademarked property, figure based on expected sales.
What are royalties?
A percentage of the actual sales, once the guarantee is paid off, licensors start receiving them.
What is the main risk of being a licensor?
Loss of control over the marketing process.
Name two benefits of being a licensee.
1.) profits
2.) retail opportunities
What is the main risk of being a licensee?
signing the licensing agreement.
Why is international sports licensing so successful?
The universal appeal of sports.