Term and Territory
How long is the Term for which you have granted rights? Is there any extension at the end of the Term or a sell-off period for any stock? Are all materials and stock returned to you at the end of the Term/sell-off? Is the Territory less than worldwide? If so, can you add other territories as the deal progresses? And can you sell in goods or services to the Territory from outside the Territory?
Grant of Rights
Are the rights you are granting exclusive or non-exclusive? What rights are you granting? Manufacturing? Selling? Marketing? Advertising and promotion? For which sales channels do they have these rights? Do they include online and mobile? Can they sub-licence to someone else?
Does the company you are granting rights to need any approvals from you before they carry out particular activities? If so, are there any time limits you must comply with? Must you be “reasonable” about granting approvals or not? Must the approval be in writing or is it okay if it’s verbal?
If there is an advance or licence fee when is that payable? Is some of it staged rather than it all being paid up-front? Is there a guarantee instead or as well, which is not paid out till the end of the Term? Is the advance/fee off-set against royalties or commission you have to pay? How is any royalty or commission calculated? What is the “base price” – is it a dealer or retail price? Can deductions be made from that base price before calculating the royalty – for example discounts or rebates given to customers, packaging costs, or marketing costs all spent by the company you are giving the licence to?
How often do you have to be accounted to for royalties? In what format must statements be delivered and in what currency must you be paid. Must they receive an invoice before payment? How are withholding taxes dealt with – may they be deducted before you are paid?
Can you promise in the agreement that the product is owned by you and that you are fully entitled to grant them all rights? Have all rights granted by you been fully cleared and paid for?
Are you able to assign the agreement to someone else if you need to? Can they? Or does that need your approval? If they take in investment or get bought and have a change of control does that affect their rights? Can you terminate?
Marketing Commitments and Service Levels
Are they agreeing to any marketing or service level commitments? If so are they precise, measurable, achievable and timetabled? What are the consequences if they fail to perform? Are there any service level commitments you have to agree to cover things like maintenance, repair, replacement of faulty goods or fixing software bugs? Can you fulfil those commitments?
LawBite Legal Advice
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