Exclusive License

Posted in Marketing and Strategy Terms, Total Reads: 1441

Definition: Exclusive License

An exclusive license is granted to a company or individual (licensee) by a licensor for any specific scope of work. For example cricket matches held in different countries have different exclusive licenses with the channels that broadcast these matches.

Matches held in South Africa are only broadcasted to India by Ten Sports. Ten Sports thus has the exclusive license to broadcast.

An exclusive license does not mean that others cannot do the same thing. It is just that there should be changes in the rights and scope of what others do which is not part of the license. Disney has the exclusive license of Mickey Mouse. If any other company wants to use Mickey Mouse in their promotion, advertisement, banners etc they will have to pay royalty to Disney.

Same concept is applied to marketing also. Many big companies which are not able to penetrate any local market due to local brand competition in that area give exclusive licenses to these small local companies. The license may include use of same technology, production, marketing, advertising, use of their brand name etc which is exploited by the smaller company. They cannot pass this license to other smaller companies though. The licensor company gets a royalty from the licensee company in the range of 5% to 10%. This way the bigger company is able to penetrate the market and make profits also by exploiting local brand’s advantage to their favor.

Legal action can be taken against the licensee if they break any clause in the license.

Hence, this concludes the definition of Exclusive License along with its overview.

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