For anyone following the Ford GT naming saga, I thought I'd toss out
some business aspects of brand licensing to be considered in what
constitutes a "fair price". I've set up a couple brand license deals at
HP, but would not consider myself any kind of expert, so consider this
as you wish.
It is very common for brand license deals to be based on % of revenue,
but it can be structured any number of ways. The structure and amounts
should reflect the financial benefit drawn from the investment/cost,
which can vary a lot from deal to deal. I have seen deals from 7% all
the way up to 25%. I'm sure some go higher.
The larger numbers are justified when the licensee will have much
better business performance with the "licensed" brand than without it.
Take two nearly identical T-shirts, one with an official FORD blue oval
and the other blue generic block letters FORD. How many of the latter
you think will sell? (few) Will they sell for the same price as the
real logo shirt? (NO) The brand license is worth a lot to that guy (I'd
say 7-10% is fair). Now how much do you think a FORD brand license
would be worth to Ralf Lauren for the same shit, Ford logo vs Polo? $0
- 0%.. since he already has a brand that will sell the shirt.
The point is, the value depends on the specifics of the business and
products.
So back to the question of fair... how much more money will Ford make
if they named the car Ford GT40 vs Ford GT? That would establish the
cap on what Ford should pay for the rights, though they may want to
over-pay for sentimental reasons. I'm not sure $10k is all that
insulting (assuming it's just for the car and not the related apparel
and accessories).
>From the other side of the argument... how much are the rights to GT40
worth to Bob Wood and his business? Probably quite a bit, since whoever
has those rights, has instant credibility as a GT40
supplier/manufacturer and can rack in the green for all those GT40
t-shirt, etc deals, so I can see the case where Ford charged him more
than they'd be willing to pay to use on the car. Bob would stand to
have made more $ if he had let Ford license the name for the new car
for free, but retained the rights for all the related apparel and
accessories, or negotiated a rev share of Ford doing that.
available for brand license consulting,
Stephen Waybright
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