Licensing has become a crucial growth strategy for businesses, offering diverse avenues for expansion and revenue generation. In today’s challenging environment, where many businesses struggle, licensing provides opportunities to partner with established brands, monetize intellectual property, and expand through franchising. Companies like Authentic Brands Group and Qualcomm have demonstrated the power of licensing in generating significant revenue. Meanwhile, franchising and publisher licensing have enabled businesses to scale and adapt to changing markets, proving that strategic licensing can be a key to thriving in a competitive landscape.
Tapping into Established Brands: A Faster Route to Growth
While many entrepreneurs aim to build their products and brands from the ground up, licensing can offer a quicker path to expanding markets and boosting revenue. This strategy involves collaborating with established brands to utilize their intellectual property, such as trademarks or patents. For smaller businesses or startups, licensing can provide access to new customers, distribution channels, and markets that would otherwise take years to reach.
For instance, Authentic Brands Group (ABG) has built a successful model around acquiring and licensing well-known brands. In 2022, ABG’s licensed brands, including Forever 21 and Reebok, generated $21.4 billion in retail sales. By partnering with a larger brand, small businesses can sidestep the lengthy process of building brand awareness and instead focus on their strengths, such as product innovation or customer service, while benefiting from the credibility and recognition of an established name.
Monetizing Innovation Through Technology Licensing
In the tech industry, licensing has become a vital strategy for companies with valuable intellectual property, enabling them to generate revenue from their innovations without directly producing or marketing products. Qualcomm exemplifies this, generating nearly $6 billion in 2023 by licensing its cellular patents to smartphone makers globally. This consistent income allows continued investment in research and development. Similarly, NVIDIA significantly boosted its revenue in the 2010s through licensing agreements with Intel.
To leverage tech licensing, identify where specialized software or IP can benefit your business, prioritize high ROI tools, and consider offering your proprietary methods to others in the industry.
Franchising: Expanding Through Strategic Replication
Franchising is a powerful tool for business expansion, enabling companies to grow rapidly without the significant capital usually required for such growth. By replicating a proven business model across multiple locations, franchising allows entrepreneurs to scale their operations quickly and efficiently. This strategy has transformed many local businesses into national and even global powerhouses.
A prime example of franchising success is Orangetheory Fitness. Founded in 2010, the company quickly expanded its footprint through franchising, growing to over 1,500 studios worldwide. In 2018, the company reported system-wide sales exceeding $1 billion, showcasing the lucrative potential of a well-executed franchise model. More recently, Orangetheory has continued its expansion, announcing plans for a $3.5 billion merger, further solidifying its position as a global leader in the fitness industry.
For entrepreneurs eager to scale quickly, franchising offers a compelling pathway. By leveraging a successful business model and brand, franchising enables businesses to tap into the local expertise and capital of franchisees, fostering exponential growth. The key to successful franchising lies in a robust core concept and the development of scalable systems and strong support structures for franchisees.
Adapting to the Evolving Media Landscape Through Publisher Licensing
As traditional media models face significant challenges, the publishing industry has turned to licensing as a vital strategy for survival and growth. This approach has proven transformative, enabling brands to leverage their intellectual property in new and profitable ways.
For instance, Playboy, once heavily reliant on magazine sales, successfully transitioned to a licensing-centric model. By 2019, the company generated $1.5 billion in retail sales through licensed products, showcasing the lasting value of its brand beyond print media.
Similarly, digital publishers like BuzzFeed have capitalized on licensing to diversify their revenue streams. BuzzFeed’s licensing revenue skyrocketed from under $5 million in 2017 to an impressive $260 million by 2019. This shift has allowed digital-native brands to reduce their dependency on traditional ad revenues and subscriptions, thereby ensuring a more stable financial future.
To maximize the potential of publisher licensing, business leaders should start by identifying gaps in their content strategies. Partnering with publishers that offer complementary content can enhance a brand’s offerings, while exclusive licensing deals for high-performing content can create a competitive edge. Additionally, companies with unique and valuable content should explore opportunities to license their material to other brands, unlocking new revenue streams.
Conclusion:
Looking ahead, licensing is poised to play an increasingly critical role across various industries. In a global economy that is becoming more competitive, the strategic use of brand equity and intellectual property through licensing may be key to not just surviving but thriving.