Setting royalty rates in licensing agreements

This paper addresses the most relevant aspects related to the management of brand licensing agreements, with a particular focus on royalties – the economic fee granted to the licensor (or brand owner). The first section of the paper in particular illustrates the different methodologies – used by manager in real word situations – to quantify the value of brand licensing agreements and set royalty rates whereas the second part introduces a new methodology (empirically tested) able to address the limits of the traditional approach.