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There are many reasons for an intellectual property (IP) owner to grant a license. The most obvious one is to generate revenue from the guarantee and royalty payments. But licensing also can serve a number of other purposes.
- Marketing support for the core business – For a television show, movie, children’s book or sports franchise, the retail display and proliferation of licensed products doesn’t only generate product sales, but it also promotes the core property.
- Extending a corporate brand into new categories, areas of a store, or into new stores overall – Licensing represents a way to move a brand into new businesses without making a major investment in new manufacturing processes, machinery or facilities.
- Trying out potential new businesses or geographical markets with relatively small upfront risk – By licensing its brand to a third-party manufacturer, a property owner can try new businesses, or move itself into new countries with a smaller upfront investment than by building and staffing its own operations.
- Maintaining control over an original creation – Licensing represents a way for artists and designers to profit from their creative efforts, while maintaining control over how they are used.