A Guide to Fashion Licensing

In the fashion world, licensing can be a great way to expand the possibilities of your business.  Though it offers great opportunities, this option is not without risks and you should invest time to carefully think about a potential licensing agreement.  Use the following checklists when evaluating a licensing opportunity:

Forms of fashion licensing:

  • Licensing-out a brand name, logo, product design, or fabric design into an associated product category
  • Licensing a brand name to accessory manufacturers and perfume makers
  • Licensing print or textile design copyrights for use on furniture, luggage, or other products
  • Collaborating with a well-known brand in another industry to create a new product-line (wallpaper, for example)

Potential Advantages of Fashion Licensing:

  • Gain status and credibility with a different group of customers (for example, the successful collaboration between Moschino and McDonalds in 2014, which sold out handbags, iPhone cases, sweaters and backpacks)
  • Increase brand recognition
  • Target new audience
  • Expand into new categories and geographies
  • Test a new market (for example, Stella McCartney’s collaboration with Gap Kids before launching Stella McCartney Kids)
  • Increase profile and brand awareness
  • Revenue without manufacturing or marketing risks (for example, H&M’s collaborations with fashion designers)
  • Producing innovative and attractive fashion items

Potential Risks of Fashion Licensing:

  • Damage or dilution of the brand (for example, Calvin Klein sued Warnaco in 2000 for diluting the Calvin Klein brand by producing sub-standard products and trading with discounted retailers)
  • Sending a mixed message through collaboration with an ill-matched brand
  • Restricting the granting of future licenses  or breaching earlier licenses 
  • Extensive contracts and potentially protracted negotiations 
  • Works being tied up and never used 

Advice for Fashion Licensing:

  • Choose a partner carefully
  • Choose a complementary brand
  • Ensure that the terms of the license are clear about the scope of the license, including duration, categories of goods licensed, and applicable territories
  • Make certain which rights have already been granted to third parties
  • Discuss key terms of the collaboration at the earliest stage possible
  • Decide early how ownership of the intellectual property will be held
  • Work out which party is responsible for registering intellectual property