Attorney David Koehser writes that royalty rates in merchandise license agreements are dependent upon several factors, many of them unique to consumer markets:
- Consumer recognition of the licensed property;
- Current or anticipated exposure for the licensed property;
- The licensed products on which the licensee will be authorized to use the property;
- The territory, channels of distribution and degree of exclusivity offered to the licensee;
- The start date and term of the license;
- Professed or actual retailer interest in the licensed property and/or licensed products; and
- Advertising commitments by the licensor, licensee or other licensees.