Clear agreements protect intellectual property, define permissible channels, allocate responsibilities for marketing and returns, and provide remedies for breach. Thoughtful terms on territory, exclusivity, reporting, and quality control help maintain brand value while facilitating expansion, reducing litigation risk, and providing predictable revenue streams for licensors and rights holders.
Including minimum sales guarantees, clear royalty formulas, audit rights, and remedies for underpayment ensures licensors receive fair compensation and have tools to detect and correct underreporting, providing reliable income streams and reducing revenue leakage.
We combine business law experience with attention to practical contract mechanics, advising on royalties, territorial rights, quality control, and termination logistics. This ensures agreements align with client goals while addressing operational realities and minimizing exposure to unnecessary risk.
If performance problems or breaches occur, we prepare evidence, pursue settlement discussions, or engage formal dispute resolution options. Early planning of enforcement strategies protects revenue and minimizes operational disruption while seeking commercially acceptable outcomes.
A licensing agreement grants permission to use intellectual property under defined terms while retaining ownership, often limiting uses, territory, and duration. Licenses address rights to trademarks, patents, or software, and frequently include royalty structures, quality standards, and sublicensing rules to protect the licensor and monetize assets. A distribution agreement governs the sale and resupply of goods through a distributor who purchases or resells products to customers. These agreements focus on logistics, pricing, territorial restrictions, minimum orders, marketing responsibilities, and return policies, ensuring a reliable supply chain and clear performance expectations for both parties.
Royalty structures include fixed fees, percentage-based royalties, minimum guarantees, and tiered rates based on volume or milestones. Negotiation should focus on aligning incentives, ensuring transparency in reporting, and creating mechanisms for handling shortages, returns, and late payments while maintaining predictable revenue for licensors. When negotiating, consider audit rights, payment timing, currency and tax implications, and escrow for disputed amounts. Clear definitions of net sales, deductions, and payment schedules prevent disputes and protect cash flow, while minimum guarantees provide baseline revenue and demonstrate distributor commitment.
Quality control clauses require distributors or licensees to meet specified product standards, packaging requirements, labeling rules, and marketing guidelines to protect brand reputation. Approval rights for promotional materials and restrictions on product modifications help maintain consistent customer experiences and reduce liability risk associated with improper use of intellectual property. Include processes for inspections, corrective actions, and consequences for repeated quality failures, such as cure periods or termination rights. Requiring compliance with applicable safety standards and regulatory requirements further reduces exposure to product liability claims and strengthens the licensor’s ability to enforce standards.
Audit rights allow licensors to verify sales figures and royalty payments by inspecting records, usually with reasonable notice and frequency limits. Implement controls such as confidentiality protections for reviewed materials, precise definitions of reportable items, and stipulated procedures for resolving discrepancies to ensure audits are effective and commercially acceptable. When negotiating audits, set clear scopes, sample periods, and cost-shifting rules for significant underreporting. Audits should be proportionate to the deal value, and include remedies for underpayments such as interest, corrective reporting, and reimbursement for reasonable audit costs when material discrepancies are found.
Liability limitations and indemnities allocate financial responsibility for third-party claims, breaches, and regulatory fines. Parties often limit direct damages and exclude consequential losses while preserving indemnities for intellectual property infringement and gross negligence. Tailoring indemnity scope to realistic risks balances protection with insurability concerns. Negotiate caps tied to fees or a multiple of the agreement value, carve-outs for willful misconduct or IP infringement, and insurance requirements. Clear procedures for notice, defense, and control of claims prevent disputes over responsibility and ensure efficient handling of third-party demands.
Include termination for cause with defined material breach events, cure periods, and termination for convenience if commercially desirable. Specify notice requirements, effective dates, and the rights and obligations that survive termination such as outstanding payments, confidentiality, and limited post-termination sales or wind-down arrangements to reduce business disruption. Draft transition provisions covering remaining inventory, continued servicing obligations, and assignment of customer relationships where appropriate. Clear post-termination steps help protect revenue, support customer continuity, and reduce disputes over stranded stock or incomplete obligations after the agreement ends.
Exclusivity can raise antitrust concerns if it forecloses competition in a relevant market, particularly for dominant firms or large territorial exclusive deals. Assess market share, duration, and scope to avoid arrangements that could trigger scrutiny and ensure exclusivity is justified by legitimate business reasons such as investment in marketing or infrastructure. Include performance conditions for exclusivity to mitigate antitrust risk, such as minimum purchase requirements and quality obligations. Structuring exclusivity with measurable performance benchmarks balances market access with competition law compliance and reduces regulatory exposure while preserving distributor incentives.
Cross-border agreements must address export controls, customs classification, tariffs, VAT or sales tax, currency risk, and applicable import regulations. They should also provide clear allocation of responsibilities for shipping, insurance, duties, and compliance with local labeling and safety requirements to avoid regulatory violations and unexpected costs. Dispute resolution and governing law clauses require special attention for international deals, and careful consideration should be given to enforcement practicalities across jurisdictions. Using bilingual documentation, local counsel coordination, and clear Incoterms for logistics improves predictability and reduces cross-border friction.
Assignment and sublicensing can affect negotiating leverage and brand control, so licensors typically restrict these rights or require prior consent. Consent provisions can be structured to be reasonable and time-limited, allowing licensors to prevent transfers to competitors or parties that might harm the brand while enabling commercial flexibility for business changes. When considering assignment, include replacement criteria, change-of-control triggers, and financial assurance requirements. Sublicense permissions should specify that the licensee remains responsible for sublicensee compliance and reporting, preserving the licensor’s contractual protections and enforcement options.
If a distributor underreports sales, use audit evidence, reporting history, and agreed remedies to quantify underpayment and pursue recovery through negotiated settlement or contractual enforcement. Early engagement can preserve the relationship while asserting rights to owed royalties, interest, and audit costs when applicable under the agreement. Document discrepancies carefully, provide notice, and follow contractual cure processes to avoid procedural defenses. If negotiations fail, leverage dispute resolution clauses such as mediation, arbitration, or litigation as provided in the contract to secure payment, enforce audit findings, and protect ongoing revenue.
