How to License a Product

Over the last seven days, I went to the pediatrician five times. Incredibly exhausting physically and emotionally, but the whole time I was burning a trail to the doctor’s office, I kept thinking to myself, “Thank God I have a licensing agreement with Summer Infant!” Otherwise, my company, 2 Virtues Inc, surely would have gone under by now. It is a near-impossible juggling act trying to grow a business and a family at the same time–something or someone, always gets the shaft.

I have recently had the great fortune to work with a few women by way of my Coaching by Email program. These women have fabulous products and have already achieved success by any measure. But these women also have families and have begun to feel the strain of being a “one-woman operation” and a mother trying to do right by her children. I have started to notice a “theme” and it seems to be “I’m tired of this insanity and I want out!”

From my own experience, I know that licensing is the best way out–you ditch the workload but enjoy the profits. Licensing, it seems, is the Holy Grail for mom entrepreneurs.

Licensing: How it works

When a company licenses your product, they take over the manufacturing and distribution (sales) of your product. A license agreement also gives them the right to any patents and/or trademarks you hold on your product.

The company that licenses your product is called the licensee, and they pay you royalties on any sales of your product. Typically, royalty rates are 3-10% of sales.

A license agreement is usually for a set period of time, like 5 years, and at the end of the agreement, the company may either renew the agreement or have first refusal.

Since you’re the expert about your product’s features & benefits, you will usually consult with the licensee to educate them about your product and then retain some involvement with the process throughout the agreement.

For mom entrepreneurs, a licensing agreement is a great deal–it offers the gratification of seeing your product taken to a larger “audience”, handsome royalty income and essentially, none of the work!

Here are a few juvenile product companies that accept product submissions for licensing consideration:

Parents of Invention

Safety First

Summer Infant (contact me for more details)

Pitch Your Product for a Licensing Deal in 5 Steps
1. Do your homework! Before you even consider contacting a company to discuss licensing opportunities, make sure you do ample research on a handful of companies that seem like a good “fit” for your product. Know who their key people are, their product assortment, their target market/customer and their current distribution channels. It is also helpful to read their press releases and financials (if they are a public company) for the latest news on them–you can learn a lot and sometimes even see where they are “headed” by doing this and it can work in your favor.
2. By letter or email, introduce yourself and your company in 2-3 sentences.
3. Describe your product, including any awards, press and noteworthy sales figures in 2-3 paragraphs. As mothers who have invented products, we sometimes assume that everyone wants to hear every blessed detail about how we dreamt up our big idea–not so! Keep it short, targeted and professional.
4. State why your product would be a good “fit” for this company. Give specific details like, “I recently read that you are expanding your line of nursing products and I believe my nursing cover could significantly increase your profits in this category.”
5. Ask for a meeting & follow up! Let them know that you are interested in discussing licensing opportunities and that you would like to meet with them. Tell them you will follow up in a few days (by phone or email) and then DO IT!

This article was written by Heather Allard, The Mogul Mom. She offers email coaching to help creative moms get their products developed, distributed, and licensed. She also offers copywriting and marketing assistance.

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38 Responses to “How to License a Product”

  1. Amy Trusler on May 14th, 2008 8:37 am

    Great info! I always wondered how licensing worked and that helped me get a little insight.

  2. Diana Jadin on May 20th, 2008 12:01 pm

    Very well written article. I am glad that I found your site!
    Diana Jadin
    http://www.omgconsultants.com

  3. Nancy on May 24th, 2008 3:59 pm

    Thanks for the tips!

  4. D. Willems on June 16th, 2008 11:37 am

    Good information but I didn’t see anything about patent protection or getting a non disclosure agreement signed before explaining your product. Shouldn’t I make sure that my product is protected before approaching a company for licensing?

  5. Heather Allard on August 10th, 2008 3:56 pm

    Hi D,
    Yes, it’s a great idea to have patent protection and a non-disclosure form before discussing your product with potential licensors IF your product is not yet on the market. My products had already been on the market for several years before I entered into the licensing agreement and they were also patented.

    I have heard horror stories of big companies “stealing” ideas from naive mompreneurs.

    Always protect yourself.

    Thank you for raising such an important point.
    Heather Allard
    The Mogul Mom

  6. The Mogul Mom talks about ‘How to License a Product’ | mommaTy on August 29th, 2008 7:10 pm

    [...] I’m highlighting “How to License a Product,” an article written by Heather Allard, The Mogul Mom. (When not writing for StartupPrincess.com [...]

  7. Jason on September 8th, 2008 3:04 pm

    I am interested in learning about how I can obtain a license to use the NFL logo on my new product but yet find a licensee to produce my product so that I do not have to manufacture on my own.

  8. Lavonda on October 21st, 2008 6:35 am

    Great article. I have been researching for some time now on how to get my product, Gro-aut Hair Growth Oil, on the market. 3-10% of sales from my idea doesn’t seem like much especially if you have to split that in half with a licensing consultant but like many other moms, I guess we have to start somewhere.

    Lavondas last blog post…Gro-aut Hair Stimulator Vitamins

  9. Lisa Long on May 4th, 2009 11:39 am

    What is your opinion on using a licensing agent? Are there any reputable ones out there?

  10. Sue on June 30th, 2009 2:27 pm

    I have had my product made by virtual prototype. I am looking into a company that wants to license the product, manufacture, distribute and market it. I have trademarked the name, and am unsure of how this whole process works without giving up a good portion of it. I love the name start up princess.

  11. april kitchens on August 9th, 2009 7:15 pm

    I would like some more contact info. on companies that accept submissions of products to license.
    Thanks
    April kitchens
    .-= april kitchens´s last blog ..Family Picture =-.

  12. rich clinton on October 29th, 2009 7:10 am

    do you need to spend the money on a patent for your product inorder to protect your product and try to get your product into a licensing deal ? can you protect a prototype?

  13. Michael on November 27th, 2009 9:51 am

    I have a design that includes NFL,MLB,NCAA sports teams. I have tech packs made and i’m looking to get samples made,having a hard time to finding in NY area,any ideas? Also, what’s the best way to protect my design, because it does use NFL,MLB, and NCAA team logos and names. I feel like i hit a major road block. Thanks for any help.

  14. marjorie hall on February 15th, 2010 5:50 pm

    We can help you with your provisional patent at a very reasonable cost. We learned how to do it ourselves with our first product. And saving money is important when you are starting out. contact me at my email address

  15. Dwight Britton on March 9th, 2010 2:08 pm

    Two guys listed are working on sports products as I also am. If we were to compare notes perhaps we could all move forward collectively. I havebeen designing and developing products for 40 years and have a few hundred
    inventions. I am open to help other inventors (at this time) who are working on sports products. I have spent countless hours as most inventors have, in my quests. Thanks. Dwight Britton

  16. James Anderson on September 5th, 2010 9:42 pm

    For mom entrepreneurs, a licensing agreement is a great deal–it offers the gratification of seeing your product taken to a larger “audience”, handsome royalty income and essentially, none of the work! I love that sentence

  17. Martin on September 15th, 2010 6:46 am

    I have a sports/trade products currently in patent national phase USA, England and Australia. It is 3 products brought into 1 seamless product.
    It has taken me 5 years and still no return.
    the cost so far $70,000 AUS
    If i can get to the big guy’s in the sports world I am sure every body and any body can use this product.
    Any type of sport and also for tradies and gardeners.

  18. Karen Hudson on March 7th, 2011 3:47 pm

    I have several inventions, things we all can use.
    but I am having difficulty finding companies who would be a licensee. I have no interest in running a company or the “daily grind” I have other, many other things going on.
    Can someone suggest some companies?
    Karen

  19. A.C. on March 17th, 2011 10:30 am

    My product is all ready to go. I need to know how to go about finding manufacturing companies for specific products. i.e., plastics.
    Thanks, AC

  20. Dan on May 17th, 2011 4:42 am

    Take the time to fully research any company asking to licence your product.

  21. Derek on July 27th, 2011 11:42 am

    I am looking to license my product Woody Wipes (personal hygiene wipes for men) any suggestions?

  22. nick on August 24th, 2011 6:27 am

    Thing is a patent is only useful for your product if it is unique and newly created. If you are importing a raw product (that is already been sold in other countries) and retailing it in your home country (UK), is it possible to apply for a license so that you are the sole distributor of this product in this country? If so, how does one go about getting this license?

  23. Jackie Cortes on September 11th, 2011 1:59 pm

    I’m a single mom and I have a product/prototype that I wish to introduce. I don’t trust to many individuals for fear of theft of idea. What steps should I take to protect the idea and sell it. Any recommendations who to contact.

  24. Renee on October 19th, 2011 9:47 am

    I’ve been sitting on my creation for 7 years and feel guilty for not getting it out there. Men and boys would benefit greatly from it but I like many others are fearful of giving out the idea to just anyone. I don’t trust “invention” companies due to many scams, yet I don’t have the time or money to due all of the research either. I’m tired of feeling stuck. I too need a reputable licensing agent or someone to trust to get me into motion.

  25. Shaun McNaughton on January 1st, 2012 11:58 am

    I would like to offer my services for anyone interested in packaging, production and design. We can make prototypes and packaging in North America or China. If you are set with you licencing agreements we can work with the vendors as well.

  26. Andrea on March 6th, 2012 7:44 pm

    There’s a great book (reading it now) called One Simple Idea by Stephen Key that covers the entire process in great detail.

  27. josh kantor on March 16th, 2012 8:11 am

    shaun,

    id like to talk to you about the product design and packaging when you have time. thanks.

    josh
    6074357616
    bachi@twcny.rr.com

  28. kanu patel on March 25th, 2012 10:19 pm

    i want to start the business related to the petroleum products ..(sales and service ).so which kind of licence and documentation are required for that and what will be the procedure for getting those licence ……please give the positive response ….as soon as possible..Waiting for your reply……Thanking You

  29. Trista on April 4th, 2012 2:22 pm

    I have many ideas, but dont know where to start! I hate to come up with these wonderful products and not know how to execute them into the market. Someone help me to at least get started with what I need to do.

  30. Cindy C. on May 1st, 2012 6:39 am

    Licensing Agreements suck. They are SO 1-sided that the seller ends up with $0.10 on a $1.00. If a company is TRUELY interested in your product, let them aquire you outright and take ownership of your product. Renting a start-up is NOT an option for these large companies with a HUGE amount of cash on the sidelines. No way.

  31. Kristen on June 15th, 2012 11:41 am

    Thank you for this great information. I found it to be very helpful and now feel as though I have a little more information to move one step closer to licencing and selling my products throuh larger companies.

  32. Lindsay on August 20th, 2012 11:43 am

    Hi,
    I have an idea for a product. I did some research and found a patent on my idea. The patent is 11 years old, and I can’t find the product on the market. What suggestions do you have? I would love to make the product and sell.

  33. Mila Zolotaryova on August 24th, 2012 10:00 am

    Very inspiring! I just started my new business and you helped a lot! Thanks.

  34. Linda on September 17th, 2012 9:58 am

    I went to the Library and checked out the book “How To Patent It Your Self” Then I downloaded “Google Sketchup” and drew my own drawings. So now I have a Patent Pending for just the cost of the patent and a few late fees on the book from the Library. A Store bought 72 of them, and a car lot bought 25 of them. I sale them to friends for gifts. Everyone I show them to Loves them. BUT I don’t have anywere to sale them. I’m reading ‘Get Rich Click” and “Don’t Make Me Think” I would like to start a website. But License my product sounds like a really good idea.

  35. Margaret on September 28th, 2012 5:54 pm

    I have a provisional patent on a house hold item that can be used in vehicles and camping equipment ,I am looking for a company to license.

  36. Tammy on December 3rd, 2012 6:09 pm

    I have several great products that I would like to get licensed. I have had prototypes manufactured on one of my product ideas. When contacting a company to license my product, I need a non-disclosure agreement signed.. I have read that some will not sign because it may already be in production. Who is the best licensing contact within the company?

  37. Steve on January 12th, 2013 6:55 am

    What prevents the company from stealing your idea?

  38. Eugene Ransom on January 27th, 2013 9:03 pm

    I would like to ask you a couple of questions regarding getting my product licensed

Got something to say?





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