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?
What is a Licence Agreement?
What is a Distribution Agreement?
Licence vs Franchise
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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, providing clear guidelines and restrictions for the use and modification of your property.
It outlines the approved uses of your property, ensuring that the Licensee understands the specific purposes for which they are granted permission to use it.
This includes defining the scope and limitations of the Licensee's rights to modify your property, ensuring that any changes made align with your intended purposes and do not infringe upon the integrity or value of the intellectual property.
By establishing these rules, the licence agreement helps to protect the interests of both parties involved and ensures that the Licensee utilises your property in a manner that is mutually beneficial.
The right to use the property granted to the Licensee may be exclusive or non-exclusive. An exclusive licence provides the Licensee with the sole right to use the intellectual property within the defined territory, meaning that no other party can use or distribute the property within that area. This type of licence offers the Licensee a competitive advantage by restricting access to the property and allowing them to fully capitalise on its value.
On the other hand, a non-exclusive licence grants the Licensee the right to use the property, but it also allows you to grant the same rights to other parties. This type of licence offers you more flexibility, as you can enter into multiple agreements with different Licensees, expanding the reach and potential revenue streams for the intellectual property.
What is a Distribution Agreement?
A distribution agreement is an agreement entered into between a manufacturer and a supplier that outlines the terms and conditions for the distribution and sale of the products that the manufacturer produces.
The agreement serves as a crucial partnership between the two parties, allowing the supplier to distribute and sell the items manufactured by the manufacturer.
Through a distribution agreement, the manufacturer grants the supplier the rights to market, distribute, and sell their products within a specified territory or market.
The distribution agreement not only specifies the responsibilities and obligations of both the manufacturer and the supplier but also outlines important terms such as:
- pricing,
- delivery schedules,
- marketing and advertising requirements,
- any exclusivity arrangements,
- provisions regarding quality control,
- warranties,
- intellectual property rights, and
- dispute resolution mechanisms.
In addition to facilitating the efficient and effective distribution of goods, a well-drafted distribution agreement can also help protect the interests of both parties involved.
It ensures that the manufacturer's products are effectively promoted and made available to the target market, while the supplier benefits from the opportunity to profit from the sale of these products.
By establishing clear guidelines and expectations, a distribution agreement helps to minimise the potential risks and conflicts that may arise during the distribution process. It provides a framework for collaboration and cooperation, helping to ensure that both parties are aligned in their goals and objectives.
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. If an agreement meets the 4 criteria it will be deemed to a franchise agreement regardless of what it is called.
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.
Our Services
Our team will work closely with you to create a personalised, easily understandable licence or distribution agreement that not only aligns with your business goals and strategy, but also prioritises the protection of your business interests. We understand the importance of crafting an agreement that is user-friendly and tailored to your specific needs.
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