CBM CBM Brand Licensing & Partnerships

Question 1

In brand licensing, the 'licensor' is best described as:

Accepted Answer

The brand owner who grants rights to use the brand

Answer

The licensor owns the intellectual property and grants another party (licensee) the right to use it under defined terms.

Question 2

A royalty rate in a brand licensing agreement is typically calculated as:

Accepted Answer

A percentage of the licensee's net sales of licensed products

Answer

Royalty rates are usually 5–15% of net sales, aligning the licensor's income with the licensee's commercial success.

Question 3

Brand licensing can damage brand equity when:

Accepted Answer

Licensed products are low quality and misalign with brand values

Answer

Poor-quality licensed products erode consumer trust and contradict the brand's established quality promises.

Question 4

An 'advance against royalties' in a licensing deal is:

Accepted Answer

An upfront payment that is recouped from future earned royalties

Answer

The advance is paid before products hit market, and the licensor keeps it as royalties accumulate until the advance is fully recouped.

Question 5

Which contractual clause protects a licensor from the licensee drastically discounting licensed products?

Accepted Answer

Minimum net sales or guaranteed minimum royalty clause

Answer

Guaranteed minimum royalties ensure the licensor receives a floor income even if the licensee prices too aggressively.

(CBM) Certified Brand Manager Practice Test