Brand licensing is big business for companies of all sizes, including the brand licensors themselves. Rather than physically producing all of the stuffed animals, sports jerseys, hats and other branded merchandise available at retail stores, licensors work with licensees that produce and distribute the goods to their customers.
Disney, Pokémon, Warner, Hasbro and Mattel are among the largest brand licensors that reported $280.6 billion in licensing revenues in 2021. Along with the obvious financial gains that they get from their licensing relationships, licensors also increase their brand recognition and the opportunity to readily expand into new markets.
As with any successful business alliance, licensing partnerships require careful and accurate reporting of royalties, revenues and other metrics. Brand royalty rates are established in advance and based on a percentage of brand-related revenue that each licensee generates. Either fixed or tiered, these rates may be reduced when the licensee meets a specific sales threshold as incentive to sell even more merchandise.
It’s not unusual for licensees to be audited by licensors that want to be able to review sales data right down to the individual product level. To manage these and other complexities, companies need enterprise software solutions that include industry-specific capabilities. Unfortunately, many licensees rely on manual processes, spreadsheets and basic solutions like QuickBooks, all of which consume too much time, energy and resources.
Here are four ways that NetSuite + MIBAR’s integrated, industry-specific software bundle helps licensees meet the stringent requirements of the product licensing world and manage their growing operations.
1) Brings all royalty activity and data onto a single platform
Licensees waste a lot of resources managing disjointed, disconnected technology systems. As they work to find coherence across those solutions, the companies wind up spending even more time on the problem instead of simply fixing it. With NetSuite, MIBAR can help licensees eliminate the endless process of transferring data from one application to the next, unify their data and create a better experience for their employees, customers and business partners.
2) Maps royalty codes with NetSuite’s general ledger
Using custom records or “royalty codes” developed by MIBAR, NetSuite outlines a shorthand code that may include the agency that’s being paid, the amount due, and the name/description of the asset. The system also tracks any predetermined royalty percentages for each asset, plus the effective start and end dates for any agreements. The items are added to a sales order transaction and the royalty code is sourced in. Once the product is shipped, an invoice is generated by NetSuite, sent to the customer and added to the general ledger.
3) Manages all types of royalties with the press of a button
NetSuite maps the royalty record, invoice quantity, sales price and royalty percentage directly to the licensee’s expenses, payables and/or asset account. For any royalties that aren’t prepaid, the ERP calculates the amount owed, creates a royalty record for each line item on the invoice, and flows the information right into the general ledger. “This automated process helps companies keep track of who they need to pay when it’s time to file the royalty reports,” said Kevin McAleer, MIBAR’s Manager, NetSuite Practice. “All of the formatting is done for them, and at the end of the month or quarter, the licensee hits a button, runs the report and has a completely auditable trail showing exactly what they owe and to whom.”
4) Saves money, time and effort
When a licensee has to spend weeks tracking down the information needed to report royalties, it wastes a lot of resources, time and money along the way. Multiplied across numerous licensors—all of which have individual reporting requirements—this adds up to major inefficiencies for growing and mid-market distributors and manufacturers of licensed products. “The longer these companies delay the move to a unified enterprise solution, the more it’s costing them,” said Jory Weissman, VP of Sales at MIBAR. “Those that make the move to NetSuite and implement MIBAR’s industry-built bundle can take back this time, keep more of their profits and set themselves up to build even stronger relationships with licensors.”
Using NetSuite as a foundation, MIBAR has developed a pre-existing functionality bundle for brand licensees. This helps companies eliminate their spreadsheet-based calculating and filing processes and conform to their agencies’ royalty reporting requirements. It also creates a simpler filing and auditing process and frees product licensees up to work on more important projects, growth initiatives and opportunities. Click here to learn more about Rights and Royalty Management for NetSuite.