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Definition

Merchandise & Character Licensing

Merchandise & Character Licensing is the licensing of a recognized trademark or brand that the licensor typically controls through a registered trademark or copyright.

Entrepreneurial firms such as eBay and Starbucks license their trademarks not only to earn licensing income but also to promote their products or services to a host of current and potential customers.

The key to merchandising & character licensing is to resist the temptation to license a trademark too widely and to restrict licensing to product categories that have relevance and that appeal to a company’s customers. If a company licenses its trademark too broadly, it can lose control of the quality of the products with which its trademark is identified. The outcome can diminish the strength of a company’s brand.

Merchandise & Character Licensing includes two parties: a licensee and a licensor. The licensor is the owner of the rights to specific intellectual property (IP) and the licensee produces products using the IP which the licensor grants via a license agreement. This licensing permits licensees to leverage the popular IP for creating branded products, generally for a certain time period.

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