Revenue Licence Agreement

Revenue Licence Agreement

A license confers a right of access to the company`s intellectual property, as it exists throughout the licence period, and the corresponding service obligation is therefore fulfilled over time when the client essentially uses the most recent form of intellectual property during the licence period. This is the case when all the following criteria are met (IFRS 15.B58): Conditions of scale, so that new royalties are generated when the property is reused a number of times. For example, a book publisher may enter into a licensing agreement with another party to use a work of art on the hardcover editions of a book, but not on subsequent paperbook envelopes. The publishing house may also be prevented from using the artistic image in certain advertising campaigns. It is clearly in the interests of licensees and licensees to have a clearly defined agreement, in which specific rights, responsibilities, delivery obligations and remedies exist to protect their respective financial interests. Licensees want to maximize licence fees while ensuring that their real estate is protected, and licensees want to ensure that they have the opportunity to make a profit under the terms of the agreement. Given the above points, each party can take concrete steps to achieve these goals. During his presidency, Ronald Reagan used the phrase “trust, but check” when it came to negotiating international agreements. While the relationship between licensees and takers is not of this magnitude, the concept of verification and recourse remains strong. Stamp duty is not taxable, provided that the Conacre agreement only allows the other person to enter the country to grow the crop. This type of contract is not a rental agreement, as it does not provide for exclusive ownership (the owner can enter the country at any time). Retail sales. If the purchaser is able to sell products licensed in the retail sector in his own stores or online, this function should be taken into account in the definition of gross sales.

In order to maximize licensing revenues, gross revenue should be defined either as a retail list price or as a real selling price for end-users. Since quotas are generally not related to retail and discounts are generally minimal, actual selling prices can be a good definition of gross retail sales. Wholesale lists, wholesale prices or average wholesale prices can also be used to define gross sales in the retail trade. The key is to prohibit intercompany transfer pricing as the basis for gross sales, especially when a taker owns a retail branch. Direct-to-retail licenses. The gross sales of a direct retail licence can vary considerably. Royalties can be calculated on the basis of the cost of production or the cost of products related to actual retail prices. If manufacturing or purchase costs are based, the agreement must specify the cost elements to be included and excluded. Where royalties are based on retail sales, the agreement must clearly define whether the basis is the actual setting of the selling price or the list of retailers. The landowner may allow another person to grow a crop in the countryside.

The owner and the other person can enter into a written agreement (usually called a conacre agreement). Non-monetary transactions. In many cases, licensees may attempt to achieve net sales by not recognizing the value of certain non-monetary transactions, such as trade, intercompany sales, sales to related companies, or by not misrepresenting these activities. To address these issues, make sure that the licensing agreement clearly defines how this activity should be accounted for and evaluated. For example, intercompany transfers should not be recognized for royalties, as royalties should be based on sales of the

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