No Matter What, Garfield Speaks Your Language
Companies that produce animated films and TV shows realize the potential of licensing popular characters. Disney, Hanna Barbara, MTV, Nickelodeon, Film Roman, Klasky Csupo, and Saban are all actively involved in licensing the rights to their characters.
Some animation studios hire other companies to license the rights to their characters. Others manage and control the creative and financial aspects of the licensing and merchandising process themselves. The typical licensing agreement is usually between a production company, as the owner of the rights to the character, and a manufacturer or distributor, which has the responsibility to produce and distribute the products.
Risks and Rewards
In negotiating a deal, the competing interests of both the production company
and the manufacturer have to be taken into account. A producer naturally
wants to earn as much as possible and will usually receive a percentage
of the sales of the licensed products, while seeking to maintain certain
controls over the type and quality of product created, so as to preserve
their character's identity.
On the other hand, the manufacturer wants to earn a fair profit for taking
the risk in creating and distributing the licensed products. In order to
do this, it needs a certain amount of freedom to exploit the products, with
minimal control by the production company. A key consideration is the degree
of risk the manufacturer incurs. After all, there is always the possibility
that the market for the products will never materialize, perhaps as a result
of the show's or film's lack of success. Ideally, a licensing agreement
is a fair compromise between these competing objectives.
Most licensing and merchandising agreements are basically the same. The
use of the character on a certain product is licensed for a specific amount
of time for a specific territory. The license usually allows the manufacturer
to manufacture, advertise, distribute and sell the products on an exclusive
basis.
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