Under the terms of a licence or distribution agreement a licensee is generally granted the right to use your intellectual property (including your trade mark) or to distribute your product within a defined territory.
What is Intellectual Property?
Intellectual property refers to creations of the mind and includes trade marks, designs, logos, trade secrets, business know-how, copyright and patents.
Intellectual property can be protected in a number of ways, including
What is a Licence Agreement?
A licence agreement is an agreement between the owner of the property (including intellectual property) (known as the Licensor) and another person (known as the Licensee) under which the Licensor licences the Licensee to use the intellectual property.
As the Licensor you still own the property and retain the rights to the property, the Licensee is just granted the rights to use the property.
A licence agreement will set out the "rules" that the Licensee must follow for example:
- approved uses of your property;
- rights to modify your property.
The right to use the property granted to the Licensee may be exclusive or non-exclusive.
What is a Distribution Agreement?
A distribution agreement is an agreement between a manufacturer and a supplier to distribute and/or sell the items manufactured.
The distribution agreement may include terms which dictate how the goods will be merchandised or advertised.
The distributor buys the products from the supplier and sells the products for a profit.
Licence Agreements vs Franchise Agreements
Before preparing a licence agreement we will assess your business model to ensure that your business model is not caught by the Franchising Code of Conduct (the Code).
The Code uses 4 criteria to decide whether an agreement is a franchise agreement.
1 - Has a right been granted to operate a business using a system or marketing plan which must be followed?
It is likely that there is a system or marketing plan if some or all of the following apply
- there are suggestions for retail prices to be charged for products or services;
- there are products that must be produced;
- there are recipes that must be followed;
- there are specific methods for providing services;
- there is a detailed advertising programme;
- there are restrictions on the sale of products.
2 - Is there a brand image or trade mark associated with the operation of the business?
One of the main rights that a franchisee is given by the franchisor is the right to use the Franchisor's brand, name and logo.
3- Is there an agreement between the parties?
An agreement between the parties does not need to be in writing. The agreement can be verbal or it can be implied.
4 - Have any monies been paid under the agreement?
Fees include royalty payments, up front licence fees, advertising payments, commissions and training fees.
We will assist you to develop a customised, plain English licence or distribution agreement, which is user friendly and reflects your business needs and strategy while protecting your business interests.
