If a party has a license, it wants to make sure it is used in the right way. This part of the agreement describes how the policyholder is ensuring it. This may include regular quality assurance checks or the donor`s right to track sales. In the context of a pure licensing agreement, the licensee may, on its terms and under the common law, terminate the contract as it sees fit and without reason, unless it is linked to an interest or rendered irrevocable by contract. An interest-related licence cannot be revoked by the licensee without liability and potential damage. In the event that a licence is related to an interest, the licensee must give the licensee a reasonable period of time to withdraw that interest from the property prior to termination. Since a licence does not confer any interest on the licensee, the licence is terminated in the event of the sale of the property and cannot be imposed on the new owners of that property. In addition, the death of the licensee or licensee will terminate the contract. An example of a licensing agreement in the restaurant industry would be that a McDonald`s franchisee has a licensing agreement with McDonald`s Corporation that allows them to use the company`s branded and marketing materials. And toy manufacturers regularly sign licensing agreements with movie studios and give them the legal authority to produce action characters based on popular similarities of movie characters.
Licensing your company`s assets certainly has advantages, but be sure to take these factors into account when creating a licensing agreement: most licensing agreements also address the quality issue. For example, the licensee may enter into the contract conditions that require the purchaser to provide prototypes of the product, mockups of the packaging and even occasional samples for the duration of the contract. Of course, the best form of quality control is usually achieved before the fact – by carefully checking the reputation of the licensee. Another common quality provision in licensing agreements is the method of disposing of unsold products. If stock items are sold as cheap knockoffs, this can damage the licensee`s reputation in the market. In a typical licensing agreement, the licensee undertakes to make intellectual property rights such as technology, brand name or licensee know-how available to the licensee. In exchange for the intellectual property of the licensee, the purchaser usually plays the donor a pre-feeding and/or a licence fee.