California Apparel News

The world of licensing, its benefits and pitfalls, was the topic discussed recently by a panel organized by Fashion Group International, the nonprofit network and education group for the fashion industry.

The panel, titled “Are You Fit to License?: Finding the Perfect Match to Build a Brand,” was moderated by Bruce Berton, director of international business consulting for Stonefield Josephson Inc., the Los Angeles accounting firm that serves the fashion industry.

Panelists included Sidney Blum, who specializes in royalty audits and is a principal in charge of advisory services at Stonefield Josephson; Jane Putch, president and chief executive of Eyebait Licensing, a licensing agent; Mick Mankowski, president and chief executive of licensing agent SB Licensing; Mark Werts, founder of the American Rag Cie stores who has had more than 10 years of experience licensing his brand; and Staci Riordan, an associate specializing in fashion law at Thelen, Reid, Brown, Raysman & Steiner.

The panelists pointed out the advantages and disadvantages of licensing. “The licensing business is big business, but it is not easy,” Berton told the assembled crowd of about 85 attendees at the May 21 event, held at the law offices of Thelen, Reid, Brown, Raysman & Steiner in downtown Los Angeles.

Riordan—who specializes in intellectual-property protection, management and licensing— encouraged companies and designers to safeguard their brands with trademarks not only in the United States but also in every country in which they plan to do production or to which they plan to distribute. “Before you can license a [brand], you must own the trademark,” she said.

Mankowski, who said a small business owner’s greatest asset is his or her brand, discussed international licensing as one route to expanding a brand. “Brands that are small in the U.S. can be licensed outside the U.S.,” he said. “You have to think globally.”

Werts, who has had his share of successes and difficulties as both a licensee and a licensor, said licensing has accounted for more than 50 percent of his company’s income for approximately 10 years.

Brands, he said, should approach licensing with a global perspective. “Globalization is no longer a dream. There are no more regional markets. If you’ve got something good, it can be okay here but phenomenal in Moscow,” he said.

Putch and Blum delivered sobering news about the potential and unavoidable pitfalls of licensing. “Every licensee underreports, especially in the apparel industry,” Blum said, noting apparel licensees often underreport sales in the 20 percent to 40 percent range. “Licensors are all being underpaid by their licensees.”

Both Putch and Blum agreed that to curb losses, licensors should choose licensees carefully and write the most thorough contract possible. “Your brand is only as good as your worst licensee,” Putch said. —Erin Barajas