TEN WAYS TO REDUCE THE RISK

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Although there is no way to guarantee avoiding a mistake in licensed properties, it is possible to reduce the risk, says Michael S. Stone, co-chairman of Beanstalk Group.

The licensing consultancy chief says questions to answer before signing the license contract are:

Do you truly understand the potential of the license? What's it all about?

What's the life cycle of the property and at what point in that cycle are you entering?

What exactly will the licensor do for you?

Who are the other licensees in the program and what are they planning? Have you spoken to any of them?

Has the licensor articulated a clear strategy for the property? Does it make sense?

Have you spoken to any of your buyers or retailers? What do they think of the property?

What are competing properties?

How much room is there on retailers' shelves in category?

Can you really afford the royalty rate for the property?

How are you adding value to the property?

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