SONIC THE HEDGEHOG – STILL UNSTOPPABLE! - Kazachok

International
law
Securing Your
Revenue Stream
establish control oriented processes to
capture the right amount, from the right
database, at the right time, there are
good chances that some royalties will be
missing.
As a matter of fact, it is understandable
that there is a serious gap between
contract requirements and Licensee’s
business practices. And sadly with
regards to royalties, the amount to be
reported to the Licensor does not match
with the reported one.
Business case:
Unreported articles
Let’s take an example of a textile Licensee.
There are 2 collections a year. Per
collection, licensee offers 10 designs.
Also, 4 colors and 4 sizes are available
and licensee distributes products through
3 different assortments. In total, licensee
will create approximately 1000 article
references! Most importantly, Licensee
must include such articles when capturing
royalties quarterly.
So the big question seems to be who is
THE BEACH FACTORY S.L.
Avd. Generalitat, s/n par.42
43480 Vila-seca (Tarragona) SPAIN
Tel. (+34) 977 393 794
comercial@thebeachfactory.com
doing what? And when? In fact, the real
question is not what has to be done - since
teams / internal stakeholder’s know the
solutions – but rather, the question is who
is doing it?
In the textile example here before, the
licensee forgot to capture half of the new
article references. The reason for that
is that designers in charge of creating
articles were not communicating effectively
any new article created to I.T. and
Accounting department.
In addition, a trainee was in charge of
running a royalty report quarterly by pressing
the F12 button. This is interesting
Some simple practices
By experience, here is a couple of advises
we would like to share with both Licensors
and Licensees.
1. We encourage Licensing companies to
be proactive in defining License terms and
expectations. Weak definitions are subject
to confusion,
but what’s behind F12? Where is the data
coming from? Is the I.T. query complete?
How do we make sure new article created
is effectively taken over in the quarterly
royalty declaration? Who does control the
royalty declaration before sending to the
Licensor ? And so on…
All in all, 40% findings raised are unreported
royalties. So unless you go on site
to ask questions and check records, you
would never know whether something
could be missing from your declarations.
Again, it has nothing to do with cheating, it
is making mistakes.
2. Licensing companies shall educate /
communicate to licensees early on what is
expected and acceptable from a reporting
perspective,
3. Licensee should read what they sign
and check what they send quarterly.