Monday, April 6, 2009

Fashion Incubator: "A licensing deal gone wrong"

Though LeShan and I have never pursued the avenue of licensing I have heard the word many times in our industry. Being that we've never looked into this area of business I am very unfamiliar with the ins and outs of licensing, its advantages and disadvantages. And while I'm sure licensing has its many benefits, I found this recent article on Fashion Incubator a real eye-opener.

In "A licensing deal gone wrong," Fashion Incubator's Kathleen Fasanella details the true story of one couple's nightmarish experience pursuing a licensing deal for their product.

I know that in spite of my many warnings to the contrary, a lot of people are hot for licensing deals. In that vein, I found a cautionary tale in the form of a series of blog posts which provides a detailed description of a licensing deal gone wrong. I decided to feature it with the hope of preventing something similar from happening to any of you.

The story of Ed and Rebecca definitely serves as a warning for many of us, whether we're in the confectionery business, apparel business or any industry for that matter. Their story almost reads like a Grisham novel, and you'll want to read the entire thing from start to not-so-happy ending. I found Rebecca's comments enough "inspiration" to not make the same mistakes, and Kathleen's follow-up at the end of the post is full of important insight and sound advice.
I can’t speak to the confectionery industry but in apparel and with seasonal product changes, you shouldn’t borrow money against your house to do it. Proceeds from one season should feed the next cycle of development and production. I don’t mean to imply you should have the expectation of breaking even to include paying yourself a salary at the outset but having a cushion can mitigate a term of discomfort.

I think those are wise words especially in today's economy. Another good point she makes: ask yourself if your product is viable. Of course as Kathleen states, "Sometimes you just can’t know if a product has appeal until it’s launched and marketed." Unfortunately this is often all too true!

If you've ever entertained the idea of licensing your product or someone else's product, "A licensing deal gone wrong" will give you a lot to think about and reason to do a bit more research into the subject before you dive in head first. --Emily


Jyl @ MommyGossip said...

Having just sold a business last year, I can tell you how happy I am that we never borrowed against our house to run it. It was tempting at times. We were so sure we'd be able to pay it off. Whether we would have been able to or not didn't really matter. What mattered was the peace of mind we always had of knowing we had our house. A professor in my husband's MBA class on entrepreneurial business advised them to never do this and we were so glad we followed that advice!

kathleen said...

Oh you read it too? I agree their story is very compelling. Maybe Rebecca should write thrillers.

the girls of gt said...

That is great advice, Jyl. Always go with what gives you the greatest peace of mind.

And Kathleen, I hope this is the only "thriller" Rebecca will ever have to write! ;)