How to Get A Merchandise License
How to get a merchandise license entails several important steps that will allow you to sell the image or products associated with brand or trademarked design.3 min read
2. Obtaining the Merchandising License
3. First Steps
4. Creating the Merchandising License
Updated July 16, 2020:
Form Your Business
In order to form a business through which you will sell licensed merchandise, you must register your business first with the state and local government where you will be conducting business. You must decide on how you will structure your business. There are four alternatives: sole proprietorship, partnership, limited liability company, or a corporation.
Each has advantages and disadvantages that you should take into consideration:
- Sole Proprietorship: The easiest and least expensive small business entity you can set up is a sole proprietorship, and it is by far the most popular form of business that exists in the U.S. Your local Small Business Bureau can provide guidance and walk you through the steps.
- Partnership: Setting up a partnership is a little more involved than a sole proprietorship, but not that much more so. A partnership agreement should be in place, and while this can be an oral agreement. It is best, in the long run, to commit the agreement to paper.
- Limited Liability Company: A limited liability company is a business entity that provides its owners (called members) protection from liability for business debts and other business liabilities. To form an LLC, it is necessary to file articles of incorporation with the state in which you intend to do business, and there may be additional fees for notices of LLC formation in local newspapers.
- Corporation: There are several reasons to form a corporation, chief among them is the ability to limit the liability of the business owners and the ability to raise capital by issuing stock in the company. Setting up a corporation is a very involved undertaking, and it is highly recommended that, if this is your plan, you consult an attorney experienced in corporate law.
Other considerations in starting a business, regardless of type, is creating a unique name for your business, obtaining a domain name for your website, and getting adequate insurance. You may also need to obtain special business licenses, such as a wholesale reselling license. Check with your Secretary of State regarding business permits, as each state may differ in the licenses they require.
Obtaining the Merchandising License
Before you lay out any money for registering your business, renting retail space, paying for a domain name, or obtaining licenses from your state, perform the following:
- Identify the owner of the trademarked merchandise you want to sell. This is usually just a matter of conducting an online search of trademark records at the USPTO website.
- Identify the demographics that will pay you money for the licensed merchandise. It makes little sense to go through all the expense to obtain a merchandise license only to discover there is no market for the goods you want to sell.
- Obtain permission from the owner of the trademark to sell the goods. Again, if selling this specific merchandise is all you intend to do, determine as early as possible that the owner will grant you permission.
- Determine if you need a resale license, which allows you to purchase the trademarked goods from a distributor without paying sales tax.
- Check with your local revenue department regarding procedures for collecting sales taxes.
The website of the International Licensing Industry Merchandisers’ Association can provide information to help you through this phase of obtaining a license agreement.
Creating the Merchandising License
If you want to save money on legal costs, it is possible to find samples of merchandising licenses for practically every industry on the Internet. However, it may actually be more efficient and cost-effective to employ an experienced attorney to help you through the licensing process. They can help you with everything from creating the licensing document, performing background research on the owner of the trademarked products, negotiating terms of the license, understanding intellectual property rights, and even work with you on product development, packaging, real estate leases, and other legal matters that may arise during the course of business.
The business of selling licensed merchandise can be very lucrative. According to the Licensing Industry Merchandiser’s Association, global retail sales of licensed merchandise totaled almost US $262 Billion in 2016. Take the time from the very outset to create your business and do the necessary research to increase your chances of success.
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