A Trademark License Agreement permits the use of a registered mark under defined quality and brand standards. This playbook covers negotiation of territorial rights, royalty models, and enforcement of brand integrity.
Why This Matters: Ambiguous payment terms can lead to revenue shortfalls and disputes over calculation methods. Clear financial provisions ensure predictable income and strengthen enforcement rights.
Negotiation strategy
If you're the Licensor:
Ensure that the payment terms are clear and enforceable. Include audit rights to verify royalty calculations and consider minimum guarantees to secure predictable income.
If you're the Licensee:
Negotiate for flexible payment schedules that align with cash flow. Ensure transparency in royalty calculations and seek to limit penalties for late payments.
Essential elements
1
Payment Schedule
Defines timing of payments.
2
Royalty Calculation
Details method for calculating royalties.
3
Audit Rights
Allows verification of payments.
Action framework
ACCEPT
Propose edits if payment terms are unclear or do not align with financial projections.
EDIT
Reject clauses that impose unreasonable penalties or lack transparency.
ADD
Add clauses for minimum guarantees or audit rights if absent.
PRO TIP
Always ensure that royalty calculations are based on clearly defined net sales to avoid disputes.
Example clauses
FAVORABLE
Preferred Payment Schedule
"The Licensee shall pay the Licensor the royalties due under this Agreement on a quarterly basis, within thirty (30) days following the end of each calendar quarter. The payment shall be accompanied by a statement detailing the calculation of the royalties due for the relevant period."
NEUTRAL
Standard Royalty Calculation
"Royalties shall be calculated based on the net sales of the licensed products, defined as gross sales less returns, discounts, and allowances. The royalty rate shall be [insert percentage] of net sales."
UNFAVORABLE
Unclear Payment Terms
"Payments shall be made as agreed upon by both parties without a specified schedule."
Fallbacks
High-Risk Projects
In high-risk projects, consider including more frequent audit rights and higher minimum guarantees to mitigate financial uncertainty.
International Agreements
For international agreements, ensure compliance with local tax laws and currency exchange regulations to avoid legal complications.
Start-Up Licensees
For start-up licensees, negotiate flexible payment terms that accommodate cash flow constraints while ensuring eventual compliance with standard terms.
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WEEK 1
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WEEK 2
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WEEK 3
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Your team builds initial playbooks, reviews existing clause libraries, and trains the DocJuris agent to align with your internal standards and negotiation positions.
WEEK 4
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