Frequently Asked Questions

What is the purpose of the Sales Efforts Clause in a merchandise license contract?

The Sales Efforts Clause in a merchandise license contract serves a crucial role in ensuring that the licensee is committed to selling the merchandised products to the best of their ability. This clause is particularly important when an exclusive license is involved, as it ensures that the licensee is making a good faith effort to maximize sales. The Sales Efforts Clause can include provisions such as royalty guarantees, minimum sales requirements, and advertising commitments. These provisions are designed to ensure that the licensee is not only committed to selling the product, but also to promoting it effectively. For instance, a royalty guarantee could be used to ensure that the licensor receives a minimum amount of compensation, regardless of the actual sales. Minimum sales requirements can be used to ensure that the licensee is actively selling the product and not just sitting on the rights. Advertising commitments can be used to ensure that the licensee is actively promoting the product, which can help to drive sales.