Your License Agreements – How We Can Help

by | Mar 10, 2023 | PKF Texas - The Entrepreneur's Playbook®, Insight-Post

If you have a license agreement, there are many factors to consider. How can an accounting and advisory firm like PKF Texas help manage those contracts? Find out from Contract Compliance Manager Carlos Gomez in the next PKF Texas – The Entrepreneur’s Playbook® episode.

Jen: This is the PKF Texas – Entrepreneur’s Playbook®. I’m Jen Lemanski and I’m back once again with, Carlos Gomez, a Contract Compliance Services Manager here at PKF Texas and one of our Approachable Advisors™. Carlos, welcome back to the Playbook.

Carlos: Thanks, Jen.

Jen: So, we’ve talked about licensees and licensors over the years since we’ve brought you to our firm. Tell me: what do our services, how do our services interact and play with clients who have license agreements? What do we need to do with that? How do we help them?

Carlos: We can help in every stage of our license agreement. Whether it’s in the beginning, helping them negotiate the best terms for their agreement or establishing internal controls in order to ensure that reporting is accurate and reliable. Especially if that runs a big impact on their financial statements.

But we also specialize in what is royalty audits. So, typically within a license agreement, there’s a royalty fee, there’s a marketing fund fee and other types of fees that are involved with licensing on intellectual property, copyrights and trademarks or images. And in those cases, we can go and ensure that the third party to that license agreement is obeying the terms in the agreements of the contract.

Not only financial aspect of it, whether they’re paying the appropriate funds to the royalties or the marketing, but that they’re treating the product fairly, they’re using the right color schemes, they’re using the right logos, they’re not tweaking it, or they’re not combining it with other logos. And they’re putting it on the approved products that they’re supposed to.

One of the big things you see, too, is they’ll sell them to improper territories. They may be licensed into America, but then they decide, “Let’s sell the South America as well.” So, all of that plays into an effect for a client because they may have other agreements set up in those different territories or for different product lines, and they don’t want that other licensee being infringed upon by another licensee.

Jen: That makes a lot of sense. As a marketer, I totally hear that. And I want that stuff enforced. I don’t need my brand out there being different colors.

Carlos: Well, yeah. You want to protect the image – that’s the big thing. Licensors have spent years developing brand awareness, brand loyalty. Some of the clients I first worked with in my career was General Motors. And that was the concept. You have a son who had a father who may have had a Chevy truck and by association, he got a Chevy truck when he was a kid as a die-cast toy. And so as long as that image was treated fairly in the marketplace, the toy looked good, it created that brand loyalty from them as a child up to when they can afford a truck.

Jen: Perfect. Well, it sounds like we’ve got a lot more to talk about. We’ll get you back to do that. Sound good?

Carlos: Yes, ma’am.

Jen: All right. This has been another thought leadership production brought to you by PKF Texas – The Entrepreneur’s Playbook®. For more information about this and other topics, visit Tune in next week for another chapter.

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