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For Coca-Cola, the company licenses its brand to companies in each of the categories mentioned above. Licensees "rent" the brand from the owner, but are then expected to use their own expertise, capabilities and resources to innovate, produce, market and sell the officially licensed product.

Licensing is essentially an agreement between you (the licensor) and another party (the licensee) to take your product to market. In return, you receive either a lump sum or royalty payments for each item sold.

Royalty rates are typically 5-10% of a retail price, or 15-20% of a wholesale price. However, these are usually subject to agreement. An advance payment of 25% is often used for higher value licenses.

The most commonly used licensing agreements will include trademarks, technology, and trade secrets. Many times, these agreements will include more than one form of intellectual property. Many agreements have some similarities, but there are some significant differences as well.

License Agreement Tips Firmly establish ownership. A good contract should clearly state what rights are being granted pertaining to the intellectual property in question. ... Do not overlook definitions. ... Define the royalty system. ... Explain the quality assurance monitoring process. ... Be aware of government regulations.

The fee paid to a firm in a licensing agreement that gives another firm the right to manufacture their product or use its trademark is called: a royalty. A major advantage of licensing is: very little cost to the licensor.